Six traps that snare even the best credit card customers
You might have the virtue of a nun, but the credit card issuers will still find a way to to take a swipe at you. Here are six things that even regular paying cardholders should look out for.
Floating due date
Think you know when your credit card is due every month? Pull out the a stack of recent statements and check. My card's due date has fluctuated between the 15th and the 18th of each month. Credit card statements are not like rent; they don't necessarily fall on the same day each month. This month, for example, Discover moved its due date up by five days and expected cardholders to know about it. Don't get it in your head that your payment falls on a certain day each month, because it may bounce around, and that sets you up for a hefty late payment fee and, with enough of them, a hit to your FICO score. To thwart this trap, mark your to-do list with "pay the credit card" a full week before the range in which it's actually due.
Almost a month
You pay your bill on April 1. On May 2, you pay again. Guess who's getting walloped with a $40 late fee? Even though you diligently made payments a month apart, many cards will penalize you for this otherwise model behavior because in their eyes, you're a day late for that cycle. It was 32 days -- almost a month -- between payments, but actually just a hair over, which makes you delinquent, not the model budgeter you actually are. Here, the advice is the same as before: Just re-shuffle your schedule. Add "pay the credit card" to your monthly calendar, and always put it about a week before the period when it's usually due. And don't procrastinate your payment.
Buying for rewards
Even if you pay your bill on time, if you're making purchases with credit instead of cash because you think there's some side benefit, don't. Pay cash instead. Studies have shown that shoppers who use rewards cards spend more money than shoppers who don't.
Not checking the bill
Vendors are always hatching nefarious plots to sneak under-the-radar agreements into the fine print of routine purchases. It's easy to accidentally buy a magazine subscription you didn't realize you were signing up for, or scammers could be testing the health of your account with puny charges before returning for the big kill. Good customers pay the amount they're supposed to, but if you're not taking the extra step of identifying every charge on your bill, you're inviting unpleasant surprises. Yes, it's painful to be confronted with the spending you've done. But it's much worse to be confronted with spending you haven't done.
Accepting store credit cards
Even if you pay them all off on time, the simple act of applying for one can potentially lower your rating. Having lots of open credit accounts negatively affects a credit score. Unless you're getting a major discount on a big-ticket purchase worth thousands of dollars, the incentives and come-ons for taking out an in-store credit card almost certainly won't be worth the risk of taking a hit to your credit. Use your standard credit card for store purchases if you must, but cash is still king.
The minimum-payment trap
Paying your monthly minimum payment keeps you from buckling under penalties, but it's still a suggestion by a company that ultimately wants to bleed you for years. You should already know by now that adhering to the monthly payment just plays into their hands. At 18% interest, a $2,000 debt will ultimately cost about $4,600 and take 19 years to pay off under a typical minimum-payment plan. Don't trust your issuer's suggestions when it comes to debt. It wants you to stay in debt. Pay as much you can.