Tricks credit card companies play: Seven to watch out for
Folks, we might have a new winner in the contest for the most hated consumer industry. For years, the hands-down winner was car dealers.
But we think that credit card companies are giving them a serious run for their money!
Most credit card companies are downright ingenious when it comes to cooking up sneaky new credit card fees and dirty tricks that take more money out of your pocket. If you've had enough, keep reading because today we are going to reveal seven of the industry's dirtiest tricks. We hope this list will help you protect yourself, slash your costs and be credit card smart.
Dirty Trick #1: Say "Bye-Bye" to Your Grace Period
No grace period means that you'll start accruing interest the moment you charge something. That can cost you a bundle of "extra" interest.
Most credit card issuers have already reduced their grace period from 25 days to 20 days. Many others have eliminated the grace period altogether. Now they are coming up with more and more reasons to take away your grace period. Miss a payment? Stop carrying a balance? Bye-bye grace period!
Dirty Trick #2: Punishing you when you are credit smart.
If you want to see my beautiful wife throw a complete fit, just mention any of these scandalous fees in her presence! These fees are the lowest of the low because they penalize you for being a responsible credit card user.
Some of the biggest offenders include charging you a fee for:
- Closing your account
- Failing to use a card for a period of time (such as six months or a year)
- Not carrying a balance (how DARE you!)
- Every transaction each and every time that you use your card
If your card charges you any of these fees, it's time to look for a new card! Click here for our tips on how to find the best card for you.Dirty Trick #3: Doing you the "favor" of sending you "convenience" checks.
Credit cards often send you "convenience" checks so that you can write checks against your credit card account. Isn't that nice of them? Please!
DON'T do us any "favors"!
What they bury in the fine print is that these checks usually carry very high interest and fees -- even higher than regular credit card charges. Some cards also give you no grace period on convenience checks, so you start paying interest from the day you write the check! Shred these little "gifts" whenever they arrive.Dirty Trick #4: Psst... Hey, buddy, want to skip a payment?
In their infinite generosity (ha!), some cards will "invite" you to skip making a payment. This "helpful" offer, which sounds great at first blush, often comes after the holidays when your balance is big and your wallet is feeling stretched. DON'T DO IT!
Skipping that payment can lead to a host of trouble -- from a higher interest rate to possibly having to make extra payments in the future.
Are you starting to notice a pattern? You should be skeptical whenever your credit card company does something "nice" for you without you asking for it.
Dirty Trick #5: Lowering your minimum payment due.
Another way some cards try to jack up their profits and lure you deeper into debt is by lowering the minimum payment due on your balance. It used to be cards required a minimum monthly payment of about 4% of your balance, but many now require as little at 2%. Don't fall for it!
Going from a $40 payment to a $25 payment on a $2,500 balance means it will take you an extra 19 months to pay off the debt.
Dirty Trick #6: It's 5 o'clock... Do you know where your payment is?
We all know that our payment is due on a certain date or it's late, right? But a new twist being thrown into the mix is having your payment due by a certain time on the due date. If your payment is due at noon and gets processed at 12:01, you get socked with a late fee AND likely a higher interest rate.
Gimme a break! Carefully check your statement so you avoid this trap.
Dirty Trick #7: "Over the limit" fees
Credit cards charge you a hefty fee for going over your credit limit. Look, we don't have a problem with penalties for that. But now these fees have gotten excessive -- almost $40! Plus, credit card issuers don't exactly discourage you from going over your limit when they approve charges and balance transfers that put you over your max.
Dolan Smart Credit Moves
So there you have it: Seven tricks and traps you now know how to avoid. But credit card companies will keep dreaming up new ones. So here's the bottom line on how to protect yourself:
Don't sign on with a card until you have a list in writing of all fees that the company charges. You can find these in the small-print section of your credit card application. Or, if you apply online, you will have to agree to all of the terms and conditions as part of your sign up process. You can always call the company, too. Whether in print, online or on the phone, read carefully before you agree!
Also be sure to actually read any notices your credit card company sends you about changes to your card agreement. That's your chance to catch any changes before they come back to bite you.
For more tips on being credit smart and successfully managing your debt, visit Dolans.com.