How to arrange guaranteed income reduction next year

joyfulguyFebruary 22, 2007

Most of us hope for an increase in our paycheque next year - which sometimes happens, but in recent years expecially ... sometimes it doesn't.

There's an easy way to ensure that you'll have less income to use for your family's operation, though.

Suppose you've had a "credit" card (really a "debt" card) and up until now you've paid off the balance outstanding every month by the due date.

An easy way to guarantee a reduction in your income available for operations next year is to buy a lot of stuff over a short term, e.g. Christmas, using the card, with such a large amount outstanding that you can't pay it off in full every month.

That'll mean that they start charging interest on the unpaid balance ... and I think that once that liability begins, the date at which the interest starts to accrue is on the date that you buy the goods. If you use it for cash advances, it always accrues from the date that you receive the money.

If you're using a regular credit card, their regular rates are about 15 - 18% annual rate.

If you're using a store-issued card (have you noticed how enthuiastic they are about issuing them?) their regular rates usually run 25 - 28% annual level.

That means that, as of the coming months, part of your hard-earned income will be going to pay those high rates of interest.

As each dollar only works once - that means that there'll be fewer left in your pocket to use to pay other bills and buy other stuff.

That is - effectively, you arranged a pay cut for yourself.

Guaranteed!

Same result if you carry balances on your card currently, and increase them to a higher level.

If you don't boss your dollars - they'll boss you!

ole joyful

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pelican

I was shocked to read that policy change in my last master card statement. I am all for free enterprise, but it's not as if those companies don't make enough from their virtual monopoly.

    Bookmark   February 22, 2007 at 8:48PM
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joyfulguy

"Free enterprise" is when there's a more or less level playing field.

They claim that competition keeps the market "fair".

And they love competition among their suppliers - the more, the better, for it enables them to obtain very competitive rates on their inputs.

And they love it among their customers, for it means that the customers can't very well gang up on them and demand "fair" prices.

But - they hate it on their own level - it reduces their power.

Most corporations dislike that - they prefer more or less "private" enterprise.

They'll do whatever they need to in order to get rid of competition on their own level.

Buy the competitor out - especially when he's having troubles and is willing to accept a really low price for his business.

Or squeeze him out of the market by undercutting prices till he's pushed out of business - large dairies did that to the smaller ones, years ago ... as happened in many other business types, as the big guys ate the little guys.

Do you know any major type of business in Canada where there are more than half a dozen players that "serve" 80% or more of the market? And when a few players supply almost all of the market like that ... pricing and other rules become rather artificial!

We've had various government studies to evaluate whether there is competition in the price of gasoline ... and they *always* report that there is - that the market is in good shape!

And there may be half a dozen people (of about 350,000) in London and area that believe those reports!

ole joyful

    Bookmark   February 24, 2007 at 6:09AM
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