Noblejoker

The world and Australians included are spinning out of debt control. To some extent I think we all have too much trust in others (like Banks or whatever) to look after our interests. We need to be in control of our own destiny.

I/we probably don’t use credit wisely or repay my loans quickly enough. But I know that if I only ever pay the minimum repayment on my credit card I will probably never repay the balance. As a method of payment Credit Cards are very convenient but as a vehicle for borrowing – which is what you do if you don’t repay in full – they suck.

SO credit card buyer beware – don’t let that minimum repayment number fool you :)

Minimum-payment requirements seem like a good idea: Without them, credit-card holders would pay too little and let balances bloom. But a new study indicates that many of us would pay more if our statements didn’t require a minimum.

The problem with minimum-payment requirements, the study found, is that they can lower a cardholder’s sense of what a reasonable payment is — an effect known as anchoring, which was especially strong among cardholders who usually paid more than the minimum but less than the total balance. A test group of such cardholders who got credit-card bills with $700 balances and no minimum-payment requirement paid an average of $280 — about 40 percent of the balance. A control group who received similar bills that included minimums, meanwhile, paid only $161, or 23 percent of the balance — a rate of payment that would have eventually cost them twice as much interest.

Minimum payments, then, are the cardholder’s enemy — and the creditor’s friend.

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