Always Avoid Payment Holidays

Whats a payment Holiday? Have you ever received a letter from your credit card company stating that they know how difficult money can be for the holidays and as a present for you and your family they are going to excuse you from paying your bill for the next month or two to help you have a great Holiday. They say they are offering you this special present because they want you to go out and spend lots on your credit card thinking your not going to see the future when you have to pay off this new found debt. In this hub I will help explain why you should avoid this Holiday Payment Present.

The Credit Card company is doing this to make you happy but its a win win situation for them because they get you to spend your money on their card and you are not that worried about if for a bit or until its too late. Read the fine print and make sure you don't have a interest rake hike build into the deal. The best thing to do is spend money you have already saved for the holiday's and avoid this credit card company trick.

The main reason a Credit Card Company would offer such a special Deal is because they make money and lots of it. Credit Card companies offer to skip payment on a Holiday is typically a high acceptance rate among credit card consumers.. People who don't except these gifts are usually credit card holders that do not need the extended credit. People who are struggling a bit think its a great idea to take a month break from making a payment and this releases a lot of stress for someone who has trouble coming up with the extra money it takes to have a very Merry Christmas. What people don't realize when they get this holiday present its not really a present at all it just the way the Credit Card company spins it to make you feel they are doing you a great favor. For the Credit Card company its a win-win proposition; they make great profits just by making their not as well off customers very happy.

OK this is where you have to be careful the trick comes in when you read the small print and you find out that the payment holiday is not interest free! That is right you are still being charged interest and since you have not payed anything back that month, the interest is tagged onto your payment for next month. Guess what its compound interest so your pay interest on your interest.

That might be really hard to believe but here is a good example. Imagine you were to pay back a thousand of the debt back at 1.5% (that's about 19 and half percent a year). Your minimum amount you pay would be 2% (about 26.82% per year)

If you give the minimum for all twelve months of the year, then you will give back $233.51, and still owe $941.62 at the end of the year. Your debt has been lowered by $58.38, and you've minus $175.13 in interest.

With the payment holiday, though, you pay 2% per month for only eleven months (so you pay 24.3% back on the debt over the entire year). That's $217.80, and you'd pay $960.55 at the end of the year. Overall, you've gave $37.86 for your payment holiday from a payment of about $20. That means that , your month off cost you a good two months of payments.

Hey if you don't understand all the maths here don't worry - it's been deliberately made that way by mathematicians and marketers to be as hard to understand as possible, to stop you figuring out what a bad deal you're getting. After all, if you haven't read this hub, would you really ever turn down a month off paying your bills? Just remember: don't get scammed and fall for it. The more you spend, the more that ‘holiday' will cost you. Wouldn't you rather take your money and go on a real holiday or vacation, instead of spending it all on repaying credit card company?

You know the saying if it sounds to good to be true it is, well that's just what the Holiday Gift or present is too good for you but not for the Credit Card Companies. Anytime a company like a credit card company gives you an offer you can believe that its for their benefit and not yours. The only time you might get a great legitimate offer from a Credit card company is when they are scared to lose your business then they will bend their financial rules to keep you and only then. If you can't see where their money is coming from, be suspicious - it's probably all a big rip off that's going to cost you money, even if you don't realise it. The thing to do is do some research and find a Credit Card that saves you money in fees, interest and grace period days. Beware of people or Credit Card Companies baring gifts. You know the old saying and its still very true today.

I know it sounds great in all those ads you see on TV or Hear on the Radio but do yourself a big favor and avoid these Cards. Ignore the ads and stop dreaming of the rewards or gifts. Save you money by get a good credit card or even get rid of them if you can. No debt is probably the greatest gift you could give yourself. Your future is at stake do fall into the trap that all Americans are getting them self into. If you are already there then dig yourself out of the whole and pay those cards. Get rid of your Credit Cards and you can buy lots of great things for you Kids, Friends and co workers. Happy Holidays! HO! HO! HO!