Beware of Credit Tricks and Traps

A new site for consumers who want to find out more about the financial options open to them in today's crowded market.

(PRWEB) December 1, 2004 -- Credit cards have become a way of life, but for many consumers they become a serious financial drain, rather than the convenient source of funds they should be. With such a mindboggling array of credit card products and offers on the market, its easy to be overwhelmed when trying to choose, particularly when deceptive marketing can sometimes make a product seem a lot more attractive on the surface than careful consideration and reading the fine print would reveal. Visitors to http://www.lbf.org, a new site set up to provide financial information for consumers, will be able to access consumer information to make the choices less difficult.

The key for consumers is to always consider how a particular credit card will affect their long term financial health, rather than grabbing an offer which will ease financial pressure in the short term. Recently there has been a growing number of short term discount offers by credit card lenders. Consumers are seduced by bargain basement rates for a short period of around six months. This type of deal is particularly tempting for people who have already built up a debt on their credit card, and are looking for an opportunity to ease the repayment strain by transferring the debt to a lower interest card. However, once the honeymoon period is over, a very high rate comes into force, often with high fees on top of it. This type of deal can be very advantageous to anyone who has a credit card debt, but is in a position to pay it off fully over the short term period at the lower interest rate. Anyone considering making the credit switch should be very honest with themselves about the likelihood that they will be able to repay the debt fully over this period, otherwise they risk falling into an even more difficult debt position.

The other potential trap for consumers is to place too much emphasis on the benefits of rewards plans, gifts, perks and other goodies. Consumers are well advised to do the math. If a rewards point system means a customer receives a gift valued at $100 about once a year, but pays high fees and a high interest rate for the privilege, the $100 value will soon be more than eaten up. Frequent flyer miles plans often come with short expiration periods and other conditions attached which effectively render them valueless to some consumers.

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