Just recently, U.S. consumer debt (that’s everything except mortgages) hit $16 trillion. Of course, that fact is often buried in the fine print, where most of us don’t pay attention. Or, if we do, we have no idea what that means.
So what is a trillion? It’s a million million, a thousand billion or 1,000,000,000,000.
A billion is a thousand million, or 1,000,000,000.
A billion seconds ago, it was 1991. A billion minutes ago, it was the year 121 A.D. A billion hours ago, our ancestors were living in the Stone Age. But a billion dollars ago in consumer debt was just about two weeks!
Managing your debt starts with understanding what’s in the fine print. When it comes to ads, mass mail or any other kind of offer, never trust the big flashy print, the cool logos or the enticing promises. There’s always a catch in the fine print!
CHANGING THE RULES
When you signed by your signature, you gave the company the right to change the terms at any time. They can raise rates, shorten grace periods and change the rules and terms to their advantage whenever they feel like it — as long as they put those changes in writing.
This is where they’re most likely to tell you about changes. But you think it’s just filler material and nuisance ads. Start paying attention. Read everything.
This is the annual percentage rate (interest) you will pay on an outstanding balance. It’s usually variable, which means it can change without notice. Your APR may be “fixed,” but don’t let that fool you. Just because it’s not tied to an index doesn’t mean it will not change. All the company has to do is notify you that your fixed rate has increased.
Miss your due date and assume you’ll get socked with a big, fat late fee, as stated in the fine print. Typically, it’s $29, but some have increased that to $39 or more. Some companies have a specific time on the due date that the bill is due. Make sure you know exactly when your payment is due. Never, ever be late.
SLIP UP, PAY DEARLY
If you miss a payment or are late twice, expect your rate to increase automatically — and not just a little bit. It could go to the maximum allowed in your state.
Let’s say you’re close to your limit and your payment is five minutes late, so the late fee puts you over your credit limit. Well, hang on because you’re going to get hit with another fine of $29 or more. And if your payment next month doesn’t bring the balance below the limit, it will happen again.
If you use your card to get cash, to buy gift cards or to pay the rent or utilities, specific fees could apply. Make sure you know what the fine print says.
Some card companies note in the fine print that if there’s a dispute, you agree to go to arbitration. That means if you have a complaint with the company, you’ll have to pay for arbitration. You might as well stick a sign on your back that says “Kick Me!”
Mary invites you to visit her at EverydayCheapskate.com, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at https://www.everydaycheapskate.com/contact/, ”Ask Mary.” This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a frugal living blog, and the author of the book “Debt-Proof Living.”