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Avoid Credit Card Payment Holidays

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    Avoid Credit Card Payment Holidays

    Credit card companies come out with all kinds of promotions to try and get more of you money. One of the sneakiest is the offer of a "payment holiday." While it's a terrible deal for you, for the credit card company it's the best of both worlds. Credit card companies have come to love this promotion because the customer is often happy and thankful to pay more money.

    It's always important to remember that credit card companies want to make money off you any way they can. Even when it seems they are being kind and offering you something for free, you can bet they only do so with the knowledge that they are likely to make money off of you in the long run. One of these seemingly "kind" offers usually arrives after you have established a pattern of paying off your credit card for awhile.

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    The credit card company will contact you explaining that they know how it can be difficult to pay off your credit card each month. This may be around the holiday season when the credit card companies know finances are tighter than usual, or it may be for any number of other reasons that makes it seem like the credit card companies has your best interest in mind. The offer will be for a "payment holiday" where you won't have to pay anything toward your credit card balance.

    Most people see an offer of not having to pay anything to the credit card company for a month and jump at it without realizing that this "free" offer is anything but free. While the letter may make it seem like the credit card company is giving you a gift, the truth is that the credit card company is cleverly padding its bottom line. While the payment holiday lets you skip a payment, it hides in the fine print that the interest that they are charging you won't stop.

    That is how the credit card company makes money on this promotion. While you get to skip a payment, the interest will increase your outstanding balance and credit card companies also know that people are likely to charge more on their credit card knowing they won't have to pay that month. The fact is, however,that you will eventually have to pay all the money back and in skipping the payment, it means you'll be paying more.

    The lesson is that while skipping a payment may seem convenient, it will always cost you more money in the long run and should be declined. As mentioned before, a credit card company's goal is to increase its profits and those profits come from you. Always examine all credit card offers closely because if the offer has been made, the credit card company knows that there is money for them to be made by offering it.