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Avoiding Credit Card Traps
By: James Dimmitt
The next time you open your credit card statement, take a closer look at the
small insert titled “changes to your credit card agreement”. You know the one
I’m speaking about. It’s that small, folded paper written in legalese that you
promise to read some other time (but of course that time never comes) or you
just discard it with the other “junk” inserts.
First and foremost you must understand that using your credit card after you’ve
received this notification results in your automatic “agreement” to the new
terms in the notice. To prevent these new terms from affecting your account you
must stop using that credit card immediately or by the date given in the
notification statement.
The most common modifications to credit card agreements include new APR’s
(annual percentage rates), new fees and/or changes to existing fees, or a change
to the grace period on your account. The grace period is the number of days
during which any credit used for purchases may be repaid in full without
incurring a finance charge.
Not knowing or not keeping track of the dollar amount limit on your card is
another trap you should avoid. Credit card issuers will allow you to charge a
small amount over the limit set on your account. However, don’t be surprised
when you get hit with an “over limit fee”, usually around $35.00 or higher, on
your next statement. Also, be prepared for your APR to be increased if you go
over your credit limit.
You’ll also trigger an increase to your interest rate if you miss your payment
due date. Some companies consider your payment late if not received by noon or 1
p.m. on the date due. Along with the higher rate, you’ll also pay a “late fee”
of $29 on up. Be sure to use the company’s preprinted envelope when sending your
payment. These envelopes allow the pre-printed bar code to be scanned by the
post office so that it can be delivered more efficiently.
If you’ve counted on those few extra days from the time you mail your check and
the time the check clears your bank, beware! Many credit card issuers have
switched from the traditional method of processing checks to a new electronic
process. This new system shaves off a day or more from the traditional method it
normally takes for your check to clear by electronically debiting your account.
If you’re considering paying your credit card bills online, check to see if any
additional fees will be charged for using this type of payment. I recently
received an e-mail message from one of my credit card companies announcing how
easy it would be to make my payments online. Included in fine print at the
bottom of the e-mail was this note - “A fee of up to $14.95 may be charged for
this service and will be deducted from your checking account”. Hmmm, spend 37
cents on postage and mail my payment five days before the due date or pay now
and get charged an additional $14.95 fee? I’ll bet you can guess which choice I
made.
Taking the time to carefully read and understand your credit card agreement now
will help you save money by avoiding unnecessary fees or climbing interest rates
later down the road.
About the Author:
© 2005,
www.yourfreecreditreportnow.com Author: James H. Dimmitt James is
editor of “To Your Credit” a FREE weekly newsletter focusing on managing your
personal finances and credit. Subscribe and get a FREE copy of your credit
report when you visit: www.yourfreecreditreportnow.com |
