Avoid paying holidays when offered
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| Avoid paying holidays when offered |
Why do they do it?
Payment holidays offers usually have a very high acceptance rate. People think it's great that they can in a month of stress to repay debt. What they don't realize is usually that these ' holidays ' is not a gift at all. They're that big credit card company. The company is a win-win situation. They get to make big profits just by makingpoor clients happy.
How can I stop paying earn them money?
This is the trick. If you read the small print you'll find not a holiday pay interest free! You're still being bear interest. And since you don't pay anything again this month and next month there will be interest to pay interest on-call compound interest.
This is the interest paid on the interest. You may feel that a little hard to understand, so here's an example. Let's say you have $1000 payment of debt at 1.5% per month, and about 19.5 per cent a year. Your minimum payment each month is 2 percent, or 26.82% per year.
If you pay the minimum for all 12 months of the year, and will pay $233.51 941.62 condemn at the end of the year. Your debt was reduced by $58.38 and you've lost $175.13 in interest.
With holiday pay though, you'll pay a 2% per month for 11 months. So, driven by 24.3 per cent again on debt all year round. This is $217.80 will owe 960.55 dollars at the end of the year. Overall, I paid $37.86 for your payment of holiday pay about $20. In other words, your month off cost you almost two months of payments!
Don't worry if you don't understand all the math. Is deliberately designed with math and marketers to be confusing as possible, to stop you working out you get a bad deal. Just remember, don't fall for it. More than you owe most of ' holiday ' will cost you.
If it sounds too good to be true
At any time they offer you anything, they're going to make a profit on it. If you don't see the profits coming from, be suspicious.
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