06:44:31 AM Thursday, March 13, 2008
Skipping, Missing, or Making Credit Card Monthly Payments?
As the competition on the credit card market is keen, credit card companies, fighting for customers, develop new strategies of attracting new clients and keeping loyal regular ones. Card issuers design new enticing credit card offers and introduce new services. Some of them seem to be very beneficial at a first glance. But before signing up for one of them you are to find out as much as possible about it.
Have you ever heard of a "skip-a-payment" service? Let us take a closer look at this service and figure out whether it is worth signing up for or not.
Do not be surprised to pick up the phone and hear a Visa or MasterCard manager suggesting you to skip your monthly payment. You can find a similar offer in your mail box as well. Do not think that it is some kind of a joke or phone harassment. Top credit card companies really do offer this type of service to their customers.
For a certain fee you get an opportunity to skip your monthly payment. Just like that. And it will not have any negative consequences for your credit card history. But do not rush to sign up for this service. There are always some pitfalls in every promising the moon offer.
On the one hand it is a relief to escape your financial obligations at least one time. The average price of "skip-a-payment" service makes up $ 30. Say, your regular monthly payment amounts to $ 100. Of course, a hundred dollars is no rival to thirty in saving-money battle. Right? Wrong.
Look at it this way. Let's assume you carry a balance of $ 5,000. The APR accrue to your credit card deal is 12%. You used to pay $ 100 every month. Then you skip a payment. You do save $ 70. But how much do you lose? You do not pay off your balance, it grows larger, and those hundred dollars you have not paid off get added up to your total balance. Besides, you get extra interest (as your balance increases), which extends the number of months (by two in our case) it would take you to pay off your balance.
Even your low rate card offer will not eat up the extra interest you accrue, having used this service.
So, having skipped just one monthly payment you prolong your debt obligations terms and that $ 70 save will turn into extra money you are to pay. However, there are situations, when "skip-a-payment" can do you a good turn.
A job loss, some unexpected health care or car repair expenses, and other cases of emergency are just those situations when you can take advantage of "skip-a-payment". Just make sure that the cost of this service will not exceed your credit card minimum payment, and it will help cut down your expenses for the current month. Anyway, it will be much better to use "skip-a-payment" than miss your payment and get accrued high penalty fees.
But remember that after you have skipped a payment you are to intensify your paying-off activity during the following months in order to avoid extra fees and rates, and get back on track of gradual monthly payments.
michelle 06:23 AM, March 25, 2008
heh! If I had a choice, I would go with missing payments without being accrued any penalty fees. Well, talking seriously, this kind of service can really be helpful in some cases of emergency. But to me, it is good to have some savings for situations like that.
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