You're watching...
SmartCredit.com Consumer Education President John Ulzheimer on credit card myths that could be very costly for consumers.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- -- financially tough times many of us count on credit cards to get by.
And if you them wisely you can take advantage of all they have to offer but if you don't know the rules you dig yourself a deeper budget hole here to dispel.
Commonly believed in costly -- Alzheimer president of consumer education it's -- credit dot com right the first one and I hope our viewers already know this went.
You only need to pay monthly minimum of course you don't need to pay only the monthly minimum rate -- You have -- you'd be surprised just how many people think that if -- just pay that 39 dollars a month that there but the statements as are supposed to pay.
That they've got good credit they're in good shape and that's absolutely correct but the credit card industry -- -- for -- to believe.
That you should just take a monthly minimum but -- very at least got to pay that -- a 100% of the rest of the remaining.
I think that and their -- volatile your interest costs.
Some folks believe that the credit limit that your card -- -- for you takes into consideration what you can afford.
Yet you be surprised it actually does not take into consideration when she can afford.
All it when you apply for a credit card your interest rates in the credit limit is set based on your credit report -- credit -- not -- amount of money did you make.
They don't actually asked for copies of your pay stubs or your WT is like to ask for when you're applying for a mortgage.
They're usually get a set the one that it's somewhere in the neighborhood of 5000 all the low -- to twenty are 30000 on the top end.
If you want more than that vendor to have to provide some sort of proof of income or assets statement that justifies having a higher credit one of them -- -- what -- forty giving -- With so many people thank god they're willing to give me 25000 I must be wealthy let's go out spend it now of course when you know the interest rate does not say the same over time.
It fluctuates did.
Not more it didn't end the olden days three years ago it didn't stay the same because it would just generally a fixed rate what I thought I was -- pop.
I think it doesn't say this thing.
And it does not state decide that it can't be because now you're likely stock of what's called variable rate which is tied to living index -- -- -- -- -- -- -- -- -- You can also see your interest rates -- -- if you miss a payment right on the card act does not prevent interest rate increases if you've missed a payment or.
If a car -- older than twelve months old they can increase your interest rate for any reason it does not have to be tied to a delinquent say.
Do you think you get a variable rate card when in fact they're turning her admit to get a fixed rate -- -- -- -- -- -- a variable rate card.
And of course of the interest rate is not the only charge you see they're all kinds of other sneaky charges.
Yeah but I defy anybody -- to actually tell me exactly what all they are not interest related charges are.
On their credit card and I -- you Jerry if they can't do it and that's danger -- I'm things light.
-- -- over what it sees things like your foreign transaction fees.
Things like your cash advance these things -- like your late fees.
What are they people I guarantee you don't know what they are they're gonna generally range from a small percentage of the balance -- the charge all the way up to 35 to 39 dollars if you do in fact pay late or he'd gone over your limit -- -- actually opted in to allow them.
To charge you over when it fees in exchange for them are -- transactions are taking over the the defined credit wanna.
And then the rules here are so complicated they'd they -- helping you screw up in many ways.
Look we have an email from somebody he was concerned that that background -- by a new employer would hurt their credit score should they be concerned about this.
That is actually a very hot topic these days given the number of states that are changing how credit reports can be used for employment screening.
And it's applicable to the credit -- -- because one of the things that's at target is the interest rate in the card.
For a lower credits for the good news -- is that any inquiry posted -- somebody pulls your credit report appropriate climate or continued employment screening.
Is what's referred -- -- soft inquiry.
The soft dinner party has no impact on her credit sports whatsoever and only use the consumer.
Can see them other lenders cannot see those types of any -- and other employers cannot.
See -- also now -- that is good to know my friend thank you so much for only -- as always we appreciate it thank you John.
You that Jerry -- out.
