In this way, the credit card does not become a debt trap. Debt repayment by a loan absolutely! In some cases, this loan is even available with an immediate commitment. Anyone who buys on credit often gets an offer for a residual debt insurance. Debt trap: credit / mortgage lending / dispo.
So the card does not become a debt trap
Because the billing of the credit card payment takes place later, when the costs are charged once a month. The card is almost indispensable for payments on the net, but almost all shops now accept credit card payments. It is no coincidence that the loose use of credit cards is a bad experience for so many consumers.
Debt accumulates rapidly and is no longer easy to pay with the monthly salary. Here are tips on how to turn your credit card into a debt trap. Particularly common in Germany are cards that record the deposits made with the card up to a fixed date per month and a maximum of a specified transaction limit and settle the total amount at once from the player account.
Less common in Germany are the so-called revolving cards, in which the outstanding amount of money is charged through monetary installments, as is the case in the USA, for example. In the case of a bank overdraft facility, interest rates are payable immediately from the day of the overdraft and are calculated until the outstanding amount is paid, while credit card providers usually pay default interest only after the amount has been debited.
There is not the same risk with every credit card payment. The first major threat is the additionally offered credit limit of a credit card. The additional credit limit for one share in addition to the current account is initially regarded as an extended credit limit; the payout is only possible four weeks later. However, the notion that a credit card will only facilitate the relentless payment process but not act as an extension of liquidity is misunderstood.
If the current account is already idle, the credit card bill flies on the net, the dispo framework is no longer timely enough to carry out the ongoing payment. The repayment of the loan amount, as proposed by some credit card providers, should always take into account the interest rate. Allegedly, the comfortable payment in several tranches offers some scope for repayment, but on the whole the actual loan amount increases rapidly.
The interest rate is based on the disposition and can be up to 20 percentage points of the actual loan amount. For example, Best Bank calculates a hefty 22.9 percentage points from the point of departure at the machine, not just after the end of the billing cycle. Even adolescents who do not yet have sufficient experience are exposed to a particular risk of loss when using credit cards.
On the other hand, consumption is rising too quickly, while on the other hand, it hardly cares about repayments and debts. For that a card is predetermined and for an unpleasant surprise at the end of the month. Especially those who use several credit cards at the same time can quickly raise their debts.
Not all cards are the same.
Each species has very different advantages and disadvantages, and also with regard to the potential to become a debt trap. Charge cards are classic cards that provide an agreed credit limit for a certain period of time. In this context, the cardholder may add up to one additional charge per month, usually deducted from the current account.
Once the open amount has been paid, the payout limit is fully available again. No default interest will be charged for the period of the provision if the repayment was made in an amount at the contractually agreed date. The debt risk is limited by the regular debit and the agreed credit line. The maximum amount of debt that can arise is the fixed monthly credit limit.
At the same time, the business card also offers the greatest possible freedom of movement in the international arena, since there is no limit to a single credit balance. In the event of an unforeseen event, the charge card nearby will be able to lay an emergency egg. Although credit card providers usually reimburse the financial loss, if you can prove that the credit card was already owned by someone else at the time of the charge, it is better not to miss the charge card.
Regardless of the limitation on a particular credit limit and monthly load, the credit card can be used for debts – especially if the current account is already exhausted and it is not possible to pay the loan amount. The prepaid credit card works in a similar way to a prepaid card for the mobile phone: the owner can only use the credit card if there is credit on the credit card.
A threat to the debt trap is not given, which is why the prepaid card is also suitable for young people, for example, travel to other $opean countries. The upper limit of spending allows parents to control their financial circumstances, while at the same time the young person learns the safe and secure way through the relentless payment process. These are sometimes completely excluded from access to a card due to poor creditworthiness.
The prepaid card system hardly deviates from the traditional credit card – except that there is no credit. Revolving credit cards are the biggest security risk for the debt trap. In most cases, service providers promote this functionality with a particularly convenient installment payment function. The cardholder does not pay back the amount of card used on the borrowed space in one deposit, but pays small monthly installments.
The lower monthly fee, which is calculated from the distribution of the total amount over several calendar months, is advantageous. In the case of revolving cards, higher expenses are usually incurred due to the interest that accrues when using the installment payment function. It is not unusual that these are higher than the interest on current account credit; 15 or even 20 percentage points per year are not uncommon.
For example, if you borrow $ 1,500 at an interest rate of 18% and a minimum interest rate of 2% of the balance, you will have $ 350,26 in mont. Partial amounts paid to the service provider. Of this amount, however, 262.70 USD interest, while the debt only fell by 87.57 USD.
Another negative effect is the lack of clarity, which increases when the credit card is also used for existing partial payments. The monthly rate increases, the economic burden increases in the worst case, until the claims can no longer be met. As a rule, partial payments are accompanied by a booking at the Diakonie – your own credit rating deteriorates.
In principle, every card is recorded in the school, so it is better to drive with only one, but in the rotary card, the rate function has an additional negative effect. The biggest threat to a debt trap is the so-called revolving credit card, where outstanding funds are paid in installments only.
This involves the interest rate risk. At the same time, one should be aware that the down payment has an impact on the creditworthiness, as the Federal Financial Supervisory Authority (credit bureau) notes. If you want to make sure that you do not accidentally fall into the debt trap, but still do not want to dodge the mobility of a card, a prepaid card is the best choice.
Otherwise, the payment by debit card is certainly the best way to pay by credit card. If you’re already in debt, it’s a good idea to settle your debt with the credit card provider by taking an installment loan, where monthly interest rates are only a fraction of the interest rates paid by the card issuer.