Credit Card Company Asks Customers to Spend Money to Save Money

Most credit card companies don't give you a choice when it comes to raising your rate, but at least one company is willing to strike a deal with you. Whether it's worth it, well, that's for you to decide.

Citibank, like many credit providers, is hiking its interest rates. But the company is giving a rebate to customers who spend enough money on their card - up to $750 a month, according to USA Today. How much you'll need to spend depends on your credit history, and you'll have to make payments on time to qualify, but if you follow all their guidelines you could erase some or all of their rate increases. If the program works, expect other creditors to follow suit.

Now, if you're already spending the minimum amount, the program's benefits might seem like a no-brainer. For making no changes whatsoever, you avoid the new rates (though you could probably save more money by simply cutting back on your credit card usage - but we'll get to that in just a minute).

Let's say you're not quite up to your creditor's spending threshold. You're probably going to start thinking about pulling out the plastic a little more often, right? But let's think this through. Maybe you'll save some interest by spending more, but by doing so you're adding to your debt burden. It will take more years and more money to pay off the purchases you're making now. It may appear that your credit card company is giving you a way to option out, but they're really sucking you in more than ever.

Even if you're already spending enough money to cancel out the rate hike, you'd likely be better served by reducing your debt. Sure, you can save some cash by keeping your old rate. But you could save even more cash by not paying interest at all - exactly what happens when you opt to use cash instead of credit. And what starts happening when you make larger payments on that debt burden, reducing your future payments and interest.

Many folks diligently make their minimum payments each month, barely making a dent in their debt, because they're overwhelmed by the amount they owe. If that sounds like you, bankruptcy might be your ticket out by offering a way to consolidate your debt payments into manageable amounts - providing legal protection from foreclosure and repossession at the same time.

At DebtStoppers, we can identify a bankruptcy plan that's right for your family when you sign up for a free one-on-one debt analysis with one of our Chicago bankruptcy lawyers. Why pay money to save money? We can help put you on the path to real financial freedom.

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