Guest Author - Katie Byrd
Consumers beware! Are you being bombarded by credit card companies with offers that sound too good to be true – easy approval, low rates, no fees, low minimum payments, etc? Credit card companies earn over $20 billion dollars a year and are willing to offer anything to get people hooked.
What can you do to protect yourself? To begin with, always read the small print. Studies show that less than 10% of applicants read the disclosure box on the back of every application and the credit card companies know this.
Be sure they offer a grace period to pay bills without being charged interest. Twenty five days is normal. If no grace period is mentioned, interest usually begins on the day of purchase for all charges – even if you pay in full.
The disclosure box should also tell what late fees are charged if you don’t meet the card’s requirements. This is not always made clear. Late fees are among credit card companies’ biggest money makers. Higher interest rates charged on missed payments are another of their “cash cows.”
If a disclosure box mentions the more costly “two cycle average daily balance,” toss the application. The one month cycle is better.
Look for hidden fees charged for things like cash advances. These fees add up if you’re not aware you’re being charged. Also avoid using convenience checks. Interest is charged immediately at the higher cash advance rate and purchases are not covered by the Fair Credit Billing Act.
Consider doing without unnecessary services such as job loss protection, registries, life insurance and disability coverage, You can find less expensive alternative solutions elsewhere. Also think twice about Gold and Platinum cards. Are the extra frills worth the added charges?
For a roadmap on how to avoid some more of the hazards of credit cards, go to www.truthaboutcredit.org.
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