Subprime – Subprime Credit Cards, Part 3
Posted on | February 15, 2009 | No Comments
In the second installment of Subprime Credit Cards we explained that there are many great opportunities during the initial period grace period for some credit cards. Many problems start when the grace period is over. Borrowers tend to build up a balance on their credit cards during the initial period because there are no worries of building interest.
The troubling thought is that the interest starts off very high for many of these cards; sometimes as high as 30% apr. If you have built up $5,000 on your credit card and the first month after the initial grace period is charged at 30% apr, you will be paying $125 a month solely in interest. The monthly minimum payment will be below the amount of the finance charge and sadly, many people will pay that minimum and neglect actually paying off any of the principal.
It is wise to make sure an pay off the majority of any card with a high interest early and often. Unless you have been a great investor, you are not going to get an investment return higher than the rate on a subprime credit card.
Related Posts:
Subprime Lending in a Nutshell
Subprime – What Exactly is Subprime?
Subprime – The Cause of the Financial Crisis
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