Monday, December 18

Credit Card Companies Tricks And Traps

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Almost every individual has a credit card in his/her possession due to the convenience and safety of the credit card.  Its seems as though the credit cards companies have taken advantage of this by pulling some extra cash from each credit card holder.  Credit card companies are literally making billions of dollars every year by charging their unknowing customers one costly fee or hidden charge after another.  In addition credit card interest rates have been increasing rapidly and card holders are sometimes not aware that the interest rate they started out with is not the one they are paying today as it has been increased.  Below are some astonishing tricks and traps that credit card companies use on their card holders:   

Do you know that you could be charged a late fee for being five minutes late with your credit card payment?  Your credit card bill could be due on the 27th of the month; however, further inspection of your statement will show you that it’s actually due by 12pm.  To avoid credit card late fees, follow your card issuer’s payment guidelines carefully.  These payments are outlined on the back of each credit card bill.  Follow the payment guidelines carefully to ensure that payments are credited immediately.   Pay your credit card bill on or before the due date and on time.

Do you know that you could possibly be charged for not using your credit card?  Many companies have implemented what is known as an annual non-usage or inactivity fee. This is usually around twenty dollars and is one of the fees that credit card companies use to accumulate such large yearly profits.

There are credit card companies now charging foreign transaction fees on cash advances and purchases made out of the country.  This usually amounts to about three percent of the total purchase.  Annual fees are common among credit card companies and may range from $30 – $50 dollars or more per year for the privilege of using the account.  Avoid taking cash advance fees from your credit card.  Your card might have a low rate for purchases but the rate for cash advances is much higher.  And there is no grace period, you start paying interest immediately. 

Beware of “free gifts”.  Offers to raise your credit limits or payment details are short-term fixes that result in long-term debt or damaged credit.  To protect your finances avoid the offers.  Another tactic used by credit card companies is setting low minimum fees.  It will take forever to pay off your balance if you only pay the minimum fee.  Most credit card companies set their minimum payment at two percent of the debt.  At that rate you could be paying for life.

Beware of cards that cost more in fees than they give in credit.  If you have a bad credit you could fall prey to a really bad credit card deal, like the card with $360 in fees that leaves you with a $19 credit limit.  The fees that add up are the application fees, the acceptance fee after your approval and the annual fees.  These cards are usually targeted at individuals with really bad credit.

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