What The Banks Don’t Want You To Know About Debt Reduction
_Banks are in business to make themselves a profit. They pay for their staff wages and branch operational expenses by charging their customers interest on money they’ve borrowed.
So it stands to reason that the banks make more profit from you the longer you stay in debt. This means they don’t want you to know about too many debt reduction options that really can work quickly.
Sneaky Charges
If you’ve read other debt reduction information, you’ll know that banks encourage balance transfers to lower introductory interest rates. This might sound like they’re being generous and helping you out, but the reality is they’re counting on people not paying off that balance before the introductory low rate ends.
Check the fine print on your credit contract. You might not be surprised by how much interest you’ll be charged once the low rate ends. After all, we’re all aware that the rate is going to go up.
What you might not know is that some lenders have a statement in the fine print that says that your higher interest level may apply to the total amount you borrowed – not the remaining balance. There are others that even backdate the day the higher interest amount takes effect right back to the original date of your balance transfer.
Repayment Techniques
Banks are very aware that many people don’t take much notice of their repayment schedules. They’ll look at the minimum monthly payment due and then proceed to hand over that same amount each month. It’s because of this trusting attitude that banks continue to charge people monthly repayments that show clearly on their statements.
The truth is banks charge interest on any balances you have daily. Then they show you the resultant interest charges added up at the end of each month. So if you make your repayment every 30 days, then your balance on a mortgage or personal loan hasn’t changed in that time. On your credit card, the balance may go up as you charge more, but you won’t have made any repayments until the end of the month.
This guarantees the banks more profit from you because you’re paying the most possible interest they can get out of you each month.
By simply making arrangements to make a quarter of your regular monthly payment on the same day each week, you’re effectively cutting back the amount of interest the bank is able to charge you.
This means you take your monthly payment, divide it by 4 and pay this new amount every single week on any balances you have outstanding. Remember, your interest charges are calculated daily, so every week you’ve dropped the amount of interest the bank can charge you.
Simple little tricks like this aren’t sophisticated or difficult. They’re simply not spoken about by the banks because they know people don’t always read their credit contracts or their loan documents fully.
If you’re willing to take advantage of some of these simple tricks, you’ll not only reduce your debt much faster than you originally thought, but you’ll also be dropping the amount of interest the banks can charge you – which is the same as putting their profits back into your pocket.
So it stands to reason that the banks make more profit from you the longer you stay in debt. This means they don’t want you to know about too many debt reduction options that really can work quickly.
Sneaky Charges
If you’ve read other debt reduction information, you’ll know that banks encourage balance transfers to lower introductory interest rates. This might sound like they’re being generous and helping you out, but the reality is they’re counting on people not paying off that balance before the introductory low rate ends.
Check the fine print on your credit contract. You might not be surprised by how much interest you’ll be charged once the low rate ends. After all, we’re all aware that the rate is going to go up.
What you might not know is that some lenders have a statement in the fine print that says that your higher interest level may apply to the total amount you borrowed – not the remaining balance. There are others that even backdate the day the higher interest amount takes effect right back to the original date of your balance transfer.
Repayment Techniques
Banks are very aware that many people don’t take much notice of their repayment schedules. They’ll look at the minimum monthly payment due and then proceed to hand over that same amount each month. It’s because of this trusting attitude that banks continue to charge people monthly repayments that show clearly on their statements.
The truth is banks charge interest on any balances you have daily. Then they show you the resultant interest charges added up at the end of each month. So if you make your repayment every 30 days, then your balance on a mortgage or personal loan hasn’t changed in that time. On your credit card, the balance may go up as you charge more, but you won’t have made any repayments until the end of the month.
This guarantees the banks more profit from you because you’re paying the most possible interest they can get out of you each month.
By simply making arrangements to make a quarter of your regular monthly payment on the same day each week, you’re effectively cutting back the amount of interest the bank is able to charge you.
This means you take your monthly payment, divide it by 4 and pay this new amount every single week on any balances you have outstanding. Remember, your interest charges are calculated daily, so every week you’ve dropped the amount of interest the bank can charge you.
Simple little tricks like this aren’t sophisticated or difficult. They’re simply not spoken about by the banks because they know people don’t always read their credit contracts or their loan documents fully.
If you’re willing to take advantage of some of these simple tricks, you’ll not only reduce your debt much faster than you originally thought, but you’ll also be dropping the amount of interest the banks can charge you – which is the same as putting their profits back into your pocket.