Credit card tips and traps

Daria Dolan

Ken and Daria Dolan are widely known as America's First Family of Personal Finance.

Did you see the headlines this week? Congress is finally airing some of the credit industry's dirty laundry and threatening to get tough with it over the sneaky-and sometimes downright unethical ways some credit card companies squeeze consumers.

We say it's about time. Just thinking about the way some companies offer you the "opportunity" to rob your own future makes us livid. But let's be real -- credit card companies are in business to make money.

And if consumers keep taking what they dish out, a Congressional hearing isn't going to change that.

Our advice: Don't count on Congress (or anyone else for that matter) to look out for your best interest. You can easily protect yourself once you know the industry's dirty little tricks...and that's what we're here to help you do.

Let's talk about two of the industry's most offensive tricks.

1. Average Daily Gouging.

If you haven't caught on to this trick yet, WARNING! You may have the sudden urge to scream or throw something when you finally clue in. If your credit card uses the average daily method for calculating your interest rate, look into this one right away because it's costing you a small fortune!

Here's how it works against you. Say you owe $1,000. You pay $950 when the payment is due. Your finance charge will be based on the $50 you owe, right? WRONG! It will be based on the average balance for the month, which was $1,000.

2. The Day of Purchase Time Bomb.

Credit card issuers used to charge interest from the day they learned of your charge (the day it was posted to the account). Nowadays, most issuers start charging you interest on the day you made your purchase (unless you have a card with a grace period). This little beauty adds up to a hefty $2 BILLION a year in extra fees for them.

We could go on all day about these sneaky credit card tricks. Credit is by FAR the most popular topic on our radio show and the most frequent question in our email box. In response, we've put together a video that reveals even more of the credit card industry's dirty tricks and traps. You can take a look here:

Credit card debt is one of the biggest problems Americans face. Americans carry $900 billion in credit card debt: that's an average of $2,200 for every household. It's far and away one of the biggest threats to your financial future. You can expect to hear lots more about the subject from us, but today we want to hear from you! Send us your credit questions at and look for answers in upcoming posts.

Ken and Daria Dolan have hosted their own national radio program for 22 years, anchored their own television shows on CNN, authored six books on money matters, served as money contributors on CBS This Morning and have now launched a comprehensive web site and free e-letter at

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