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| Banks Love To Give You More And More Credit As Long As You Are Paying |
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| Written by Richard Moran |
| Thursday, 08 October 2009 08:56 |
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How many times have you been surprised by how much you charged on your credit card in the past month? Well that is what the banks want to happen. When you use that cards very few people keep good track of their total spending. Banks are businesses, big businesses at that, and they count on you losing track of your balances and spending during the month. They actually love you to go (slightly) over your change limits so they can tack on that over-limit fee. This little slight-of-hand can be controlled with a little effort on your part. How Banks Make Money Realistically, banks need to make money to operate. Their business model is to nickle and dime their customers here and there and it adds up to big money very quickly. Your limit is $5,000 but now you want to buy the kids college books with the card and you go over. The bank is very accommodating and approves the charge, but they will also raise your limit, and tack on a overlimit charge to your next bill. Most times you don't complain because you'll almost feel guilty that you didn't keep track of the balance. Now they have you at a new limit plateau. This of course means the balances are higher and the interest you pay each month is also higher. Another way that they make money is through loans that they may have out to people. When they are late paying their bills, they make money on the late fees that they may charge. These can be a lot more than people think and can amount to a lot of money in the long run. These banks then make money for the payment being late. These methods still continue today even months after the crisis. The banks really want to offer you all kinds of different ways to spend the money that is in the account that you may have. This is because they want you to lose track of how much money is in the accounts that you have and to help you to spend more than what you may have in the account. Then they will be able to charge you for the amount that you went over. The banks want you to use their cards - debit and credit - for all your purchases. This business plan encourages you to be very loose with your finances. A check at the restaurant becomes to easy to just put on the card and worry about it later. Gone are the days that we check our wallet to see if we had enough money to actually go to the restaurant. Enjoy now, pay later. We are all digging ourselves a whole that we may never get out from. Banks and credit card companies all need to make a profit to stay in business. But you will notice that none of the credit card companies, nor the banks who didn't dive into risky investments, have been heard to ask the government for handouts. With their basic business plan it is not hard to to come out at the end of the year with profits. Think of it - get $100 from a friend and give him $104 back at the end of the year. In the meantime you have used that $100 twenty (or more) times over for profit - this is the banks and credit card companies lot in life. About the Author: Richard Moran is a Financial Consultant and maven for Money Helpers. The Blog contains 100's of articles, charts, and calculators to assist you in your financial well-being. All the aspects of the Blog are free and it is updated on an almost daily basis. If you are looking for any financial aids or products they can be found on Money Helpers. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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