| 1.
INTEREST BACKDATING |
Most card issuers charge interest
from the day a charge is posted to
your account if you don't pay in full
monthly. But, some charge interest
from the date of purchase, days
before they have even paid the store
on your behalf! REMEDY:
Find another card issuer, or always
pay your bill in full by the due date.
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| 2.
TWO-CYCLE BILLING |
Issuers which use this method of
calculating interest, charge two
months worth of interest for the
first month you failed to pay off
your total balance in full. This
issue arises only when you switch
from paying in full to carrying a
balance from month to month.
REMEDY:
Switch issuers or always pay your
balance in full.
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| 3.
THE RIGHT TO SETOFF |
If you have money on deposit at a
bank, and also have your credit card
there, you may have signed an
agreement when you opened the deposit
account which permits the bank to
take those funds if you become
delinquent on your credit card.
REMEDY:
Bank at separate institutions, or
avoid delinquencies.
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| 4.
FEES ARE NEGOTIABLE |
You may be paying up to $50 a year or
more as an annual fee on your credit
card. You may also be subject to
finance charges of over 18%. REMEDY:
If you are a good customer, the bank
may be willing to drop the annual
fee, and reduce the interest rate --
you only have to ask! Otherwise, you
can switch issuers to a lower- priced
card.
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| 5.
INTEREST RATE HIKES ARE RETROACTIVE
|
f you sign up for a credit card with
a low "teaser" rate, such
as 7.9%, when the low rate period
expires, your existing balance will
likely be subject to the regular and
substantially higher interest rate.
REMEDY:
Pay in full before the rate increase
or close the account.
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| 6.
SHORTENED DUE DATES |
Most card issuers offer a 25 day
grace period in which to pay for new
purchases without incurring finance
charges. Some banks have shortened
the grace period to 20 days--but only
for customers who pay in full monthly.
REMEDY:
Ask to go back to 25 days.
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| 7.
ELIMINATING GRACE PERIODS |
That fabulous offer you received in
the mail for a gold card with a $10,000
credit limit, and lots of features
may not be so great. The most common
"string" attached is the
card has no grace period. You are
charged interest on everything from
the day you buy it, even if you pay
on time. REMEDY:
Throw the offer out!
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| 8.
DISAPPEARING BENEFITS |
Many banks enticed you to sign up
with extra benefits such as lifetime
warranty, a 5% discount on all
travel, or protection if an item
purchased is lost. Now, some banks
have cut back on these extras without
the fanfare that launched them.
REMEDY:
Read annual disclosure of changes,
and switch cards if need be.
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| 9.
DOUBLE FEES ON CASH ADVANCES
|
Most credit cards impose both finance
charges and a transaction fee on cash
advances. Interest starts from the
day of the advance, and the
transaction fee can be up to 2.5% of
the amount taken. Beware of cards
advertising "no finance charges."
Transaction fees may still apply.
REMEDY:
Limit cash advances.
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| 10.
FEWER RIGHTS ON DEBIT CARDS |
Some Visa and MasterCards have
payments deducted directly from your
checking account (debit cards). Under
federal law, you technically don't
have the same right to "charge
back" problem purchases as you
do with a conventional credit card.
Also, if the card is lost or stolen,
you can have up to unlimited
liability for losses if you don't
report the problem within 60 days,
which is different from the $50
maximum liability on credit cards. (Exception:
the $50 limit applies to debit cards
as well as to credit cards in
Massachusetts.) REMEDY:
Know your card. Is it a credit cards
or debit cards? They can look alike.
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| 11.
MISLEADING MONTHLY MINIMUMS |
You may think it is beneficial to
have a card where you only need to
pay 2%-3% of your balance monthly. It
is just the opposite. The bank stands
to make far more money from finance
charges the longer you carry out
payments--and you foot the bill.
REMEDY:
Pay all you can monthly.
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| 12.
INTEREST FROM DAY ONE |
When you carry a balance from month
to month, there is no grace period on
new purchases on most cards. The 20-25
day grace period where no finance
charges accrue does not apply when
you don't pay in full each month.
REMEDY:
Find cards that exclude new purchases
when calculating interest.
Also deal with
an institution that treats the
customer right. We recommend the
NextCard Visa. A card truly designed
with you in mind!
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