While most Americans have a basic idea of how credit cards work, a recent survey conducted by SmartBalanceTransfers.com revealed that many are not aware of or don’t understand concepts that can save them money on hefty finance charges.
The primary question asked in the survey was, “Have you ever heard of 0% APR balance transfers?” Of the 1500 individuals surveyed, a whopping 62.2% had never heard of this technique. No fee balance transfers have a lot to offer customers. During the process, a credit card company, in attempt to acquire a new customer, will offer to transfer the balance on their existing card over to a 0% interest offer on one of their cards as a bonus for signing up as a new customer. Those who are able to take advantage of 0% balance transfer cards can save hundreds of dollars depending on how high their balance is and what interest rate is currently being charged.
For example, an individual with a $7000 balance on a credit card at an interest rate of 13.99% who pays $140 per month for their minimum monthly payment spends roughly $20 per month on interest charges alone, therefore only $120 is applied to the principal. Assuming the interest rate remains the same and no new charges are incurred, it would take around 58 months, just about five years, to pay down the balance. While the $20 per month may not seem like much, over the life of the balance, the credit card holder spends an astonishing $1,160 on interest charges!
It’s no wonder credit card companies thrive in the society we live in; consumers simply pay the minimal amount to get by not considering how it’s affecting them over the long term. The reflection clearly shown from the credit card survey reveals a society who does not take the time to consider the the long term perspective; even minimal research regarding procuring a cheaper interest rate would reveal this method to any consumer.
It is reassuring to know that most Americans are appearing to learn from their mistakes, however. The survey showed that around 60% of Americans aged 65 and over had basic understanding of 0% balance transfer offers, while those ages 18-24 only yielded 21% who possessed the knowledge of promotional offers. Seeing as how one must be 18 to open an account, this shows that most people first get into debt, discover they are in trouble later on in life, and then seek answers.
The wealthy in the United States aren’t just well off because of luck or special favor; they employ knowledge to make sure they are getting the best deals. Over 50% of those polled with income levels between $75-99,000 per year reported that they were aware of balance transfer offers, and those having incomes even higher than this range ranked over 70%! On the flip side, Americans falling in the income bracket of under $24,000 annually only reflected a 25% awareness.
A picture is worth a thousand words, and the picture painted by this survey reveals a lot about the current state of the United States economy. By creating a larger awareness of methods that can be taken to lower monthly credit card bills, younger Americans as well as those living in poverty will have a better chance to thrive.