Your Solution

One of the first things that we have to get straight right out the door is that credit card debt is by far the most expensive type of debt product available to consumers next to unlicensed loan sharks. Holding credit card debt is extremely expensive to consumers as the annual interest rates range anywhere from 16-25% depending on the company issuing the credit card.

When getting a credit card it is vitally important to know that holding any kind of running balance on the credit card is a rather counter productive thing to do unless you know that you are going to pay off that balance within a few days. There are multiple advertisements and campaigns run by large lenders that promote people to use this easy line of credit however neglect to say the awesome amount of interest that they charge if you fall into this trap.

We personally feel that credit cards should only be used as a convenient way to pay for goods and that all outstanding balances at the end of the month much be taken care of so you won’t be hit by the huge interest charges. This view is naturally the smart one however many banks and lending institutions will not emphasize this for obvious reasons. It is up to the credit card holder to exercise their options wisely so that they can still maintain the convenience of credit cards while still keeping their debt levels low.

Here I would also like to take the opportunity to tell you a little bit about the different classifications of customers that lenders have. The smartest credit card users are often labeled by the lenders as the worst customers. This is plainly because the smartest credit card users do not hold a outstanding balance every month and thus the lenders can’t charge any interest and thus make little to no money on the card. The sad truth is that only 5% of most credit card holders are labeled as “bad customers” with the majority falling somewhere in between the “great customers”.

Banks and lenders don’t call smart credit card holders “bad customers” but rather are labeled as “valuable customers” where you are basically being good so they really don’t mind keeping you even if you don’t contribute to their bottom line. There is something to be said about being a “valuable customer” in that despite it sounding a little better you will never be treated with much concern or urgency. You won’t get the best level of service by any measure and probably will not be pleaded too if you threaten to cancel the card. It’s the facts of life that being smart with your credit card debt means you won’t be in the best books of your lender.

Your target should to be getting yourself within the group of “bad customers” for the obvious reason that you don’ pay your lender money for interest that you may owe them with outstanding credit card balances. Always pay your bills on time and run little to no outstanding balance with your credit card account at any time, this keeps all the money in your pocket instead of you having to share your monthly paycheck with your bank in the form of interest payments. The experience of being at the bottom of your lender’s list of important customers might be a bit hard to swallow at first but means you are doing the right thing and should continue.