A credit loan seems like a quick, easy fix for your financial needs, but after factoring in charges and hidden costs, it usually becomes anything but a simple fix. It always needs to be repaid and if someone is less than diligent about making responsible payments and forgetting about accompanying costs of big-ticket items, his or her credit score will bear the repercussions.
Many people struggle with calculating the comprehensive costs of using their credit card(s). But, there are always definite costs:
Routine Credit Costs
- Interest-rate/Late fees: The most obvious cost of using a credit card is the monthly rate at which you’re billed for its use, which will vary pending your credit score. If you’re negligent about paying on time, you accrue late fees and your interest rate increases.
- Assumed fees: these include activation costs, inactivity charges, cash-advancement charges, and balance-transfer charges among others.
Covert Credit Costs
There are many charges for credit card use that aren’t as easily recognized, as well as subsidiary costs of major purchases that we conveniently forget in our excited rush to get what we want. Some of these subsidiary costs include:
- Maintenance fees: After you buy a home or car, you’ll have yearly ownership costs, such as registration dues and property taxes—not to mention upkeep costs, that you’ll most likely charge.
- Closing costs: The final price of your new digs doesn’t include the price of home inspection, title transfers, etc.
- Cancelation fees: A lot of credit users aren’t aware of or don’t fully understand the financial repercussions of canceling a card. There can be a charge to close a credit card.
- Unexpected rate increases: A creditor can increase rates at will.
- Trial periods: Consumers may opt for a free limited-time offer for a service but not cancel by a due date, resulting in a bill later.
Being aware of these extra costs associated with ownership and credit purchases will help you to fully contemplate your spending decisions; and hopefully prevent you from a damaging credit score.
The better your credit score, the better your loan offers and the less your interest rates will be, so it’s worth the time investment to learn how to improve your credit knowledge to make better credit decisions. And, we can help!
A credit repair agency, like Ovation Credit Repair, can help you manage your credit loans and strengthen your credit score. Contact us for a free consultation.