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How to Avoid Costly Credit Card Tricks

Posted by: Matty Byloos | May 23,2008


Unless you plan to pay off your credit card purchases, both large- and small-scale, in a reasonable amount of time (like within a few months), then immediately cease reading price tags the way that you normally do. Why? In a nutshell, the price you end up paying never quite matches up to the price tag on the item when it’s sitting in the store. In fact, you may end up paying hundreds (if not thousands) over and above the retail cost of the item if you let your credit card balance skyrocket to within your credit limits, all the while letting it drag over from month to month.

That’s only the obvious side of credit card tricks, and really, those are the things over which you actually have a great deal of control.. Given the savvy use of fine print, most credit card companies’ experience of lenient government regulations within the states that they operate, and their increasing reliance on the use of fees to generate company revenue, the reality is that consumers exercising the purchasing power of their credit cards must be increasingly vigilant in order to avoid costly credit card tricks. Here are some smart ways to stay out of financial trouble by using your credit cards wisely.

Understand the Exact Nature of the Fixed Rate Credit Card Offering

A fixed rate, though specified by the credit card company as such, may not be exactly that. Instead, the “fixed” rate may be subject to an increase, with the only stipulation being that the issuing credit card company provides you with written notice of a rate increase. It is important, for this and a great many other reasons, to consistently read your entire credit card statement every month. That way, you will get notice of the coming rate increase, and will be able to act accordingly.

Maintaining Good Credit: The Positive Affect on Your Credit Cards

Credit card companies are in the business of lending money, and they make their profit off both fees and the interest that you pay when you borrow from them. That said, credit card companies will often check your credit report, searching for any negative marks that may denote you as a risk to lenders. Armed with that information, they are then in a position to raise your interest rates, as you represent a riskier financial venture for them. It is important for consumers to monitor their own credit regularly, and to take care of any blemishes that might appear on their report immediately.

Watch the Clock: Penalties and Fees for Payments Made Minutes After Deadline

Once again, it cannot be overstated the degree to which it is imperative to always carefully examine your credit card statement, line by line, every month. Oftentimes, credit card companies will require that your payment post and clear your account not only on a specific day, but also by a specific time of the day. Your payment may not clear until 5 p.m., but because it was due at noon that day, it is late, and your account is then subject to a late fee and a potential interest rate hike.

Minimum Payments: How to Get Nowhere Fast with Credit Cards

The reality is that credit card companies love it when you keep a balance for extended periods. Over the course of a lengthy period while you sit and grow your credit card debt, the company who has issued your card makes profits off the interest on your account, all the while, potentially making extra money from fees that you may incur.

Maybe you think they are doing you a great favor by only asking for a relatively low amount in terms of the minimum monthly payment, and typically it ends up only being as little as two percent of the total balance. In fact, paying only the minimum usually means your debt will virtually never be erased. Work to pay more than the minimum each month, and consider making two payments a month if you have the financial opportunity to do so.

Credit Card Offerings: Saying One Thing and Doing Another

Many credit card companies present new customers with outrageously good sounding offers, complete with huge credit limits and minuscule interest rates. You apply for them with a gleam in your eye, and sign off on the card the minute it arrives in the mail. And then you get the first bill. Though you may have initially been offered one set of rates (credit limit and interest payment), you may actually have been given a very different credit card: one with a much lower credit limit and a significantly higher interest rate. If you get a credit card that is very different from the one you signed up for, then cancel the card or call the company to get a set of terms that are much more to your liking.

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