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Beware of predatory retail credit cards

Everyone has probably been through the experience of being prompted by a retail clerk to open up a store credit card. Oftentimes, the credit offers are attached to one-time discounts that seem to be too good to pass up. Although accepting an offer once or twice might seem harmless, especially if a person intends to pay off monthly balances to avoid debt accumulation, simple mistakes can add up in more than one way.

One woman shared her experience with a credit card offer she accepted at a retail store. She attempted to pay off the bill, but a clerical error (misreading a numeral on her check) left her with an unexpected $2 debt. Even though this credit card debt was small, the costs added up. The woman was eventually charged a late fee and she paid it to avoid the trouble of sitting on the phone with a customer service representative.

What she didn't realize, however, was the impact missing credit card payments would have on her credit score. After failing to pay a seemingly harmless $2 debt for four months, her credit rating plummeted, which later affected her ability to get a good interest rate on a loan with her husband.

This story is a single illustration of what can happen on a larger scale. If debts are larger, the resulting problems are likely to be amplified. Even when someone might open a credit card with the intention of staying current on payments, unexpected life events can cause a person to fall behind.

Taking the time to look at credit card debt relief options can be very valuable. If a person is able to take steps to tackle debt, they may also be able to figure out a way to rebuild their credit score to lay the groundwork for a financial fresh start.

Source: CNN Money, "How a $2 debt almost turned into $90,000," Sheila Bair, Nov. 13, 2013

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