Credit Cards
12 Credit
Card Issues
You Should
Know:
1.
Interest
Backdating
Most card
issuers
charge
interest
from the day
a charge is
posted to
your account
if you don't
pay in full
monthly.
But, some
charge
interest
from the
date of
purchase,
days before
they have
even paid
the store on
your behalf!
Remedy: Find
another card
issuer or
always pay
your bill in
full by the
due date.
2.
Two-Cycle
Billing
Issuers
which use
this method
of
calculating
interest
charge two
months worth
of interest
for the
first month
you failed
to pay off
your total
balance in
full. This
issue arises
only when
you switch
from paying
in full to
carrying a
balance from
month to
month.
Remedy:
Switch
issuers or
always pay
your balance
in full.
3. The
Right To
Setoff
If you have
money on
deposit at a
bank and
also have
your credit
card there,
you may have
signed an
agreement
when you
opened the
deposit
account
which
permits the
bank to take
those funds
if you
become
delinquent
on your
credit card.
Remedy: Bank
at separate
institutions
or avoid
delinquencies.
4. Fees
Are
Negotiable
You may be
paying up to
$50 a year
or more as
an annual
fee on your
credit card.
You may also
be subject
to finance
charges of
over 18%.
Remedy: If
you are a
good
customer,
the bank may
be willing
to drop the
annual fee,
and reduce
the interest
rate -- you
only have to
ask!
Otherwise,
you can
switch
issuers to a
lower-
priced card.
5.
Interest
Rate Hikes
Are
Retroactive
If you sign
up for a
credit card
with a low
"teaser"
rate, such
as 7.9%,
when the low
rate period
expires,
your
existing
balance will
likely be
subject to
the regular
and
substantially
higher
interest
rate.
Remedy: Pay
in full
before the
rate
increase or
close the
account.
6.
Shortened
Due Dates
Most card
issuers
offer a 25
day grace
period in
which to pay
for new
purchases
without
incurring
finance
charges.
Some banks
have
shortened
the grace
period to 20
days--but
only for
customers
who pay in
full
monthly.
Remedy: Ask
to go back
to 25 days.
7.
Eliminating
Grace
Periods
That
fabulous
offer you
received in
the mail for
a gold card
with a
$10,000
credit limit
and lots of
features may
not be so
great. The
most common
"string"
attached is
the card has
no grace
period. You
are charged
interest on
everything
from the day
you buy it,
even if you
pay on time.
Remedy:
Throw the
offer out!
8.
Disappearing
Benefits
Many banks
enticed you
to sign up
with extra
benefits
such as a
lifetime
warranty, a
5% discount
on all
travel, or
protection
if an item
purchased is
lost. Now,
some banks
have cut
back on
these extras
without the
fanfare that
launched
them.
Remedy: Read
all notices
regarding
changes to
your account
and switch
cards if
need be.
9. Double
Fees On Cash
Advances
Most credit
cards impose
both finance
charges and
a
transaction
fee on cash
advances.
Interest
starts from
the day of
the advance,
and the
transaction
fee can be
up to 2.5%
of the
amount
taken.
Beware of
cards
advertising
"no finance
charges."
Transaction
fees may
still apply.
Remedy:
Limit cash
advances.
10. Fewer
Rights With
Debit Cards
Some cards
with Visa
and
MasterCard
symbols are
not credit
cards and
will have
payments
deducted
directly
from your
checking
account.
These are
debit cards.
Under
federal law,
you do not
have the
right to
"charge
back"
problem
purchases to
a debit card
as you do
with a
conventional
credit card.
Also, if a
debit card
is lost or
stolen, you
can have
unlimited
liability
for losses
if you do
not report
the problem
within 60
days, which
is different
from the $50
maximum
liability on
credit
cards.
(Exception:
the $50
limit
applies to
debit cards
as well as
to credit
cards in
Massachusetts.)
Remedy: Know
your card.
Is it a
credit cards
or debit
cards? They
can look
alike.
11.
Misleading
Monthly
Minimums
You may
think it is
beneficial
to have a
card where
you only
need to pay
2%-3% of
your balance
monthly. It
is just the
opposite.
The bank
stands to
make far
more money
from finance
charges the
longer you
carry out
payments--and
you foot the
bill.
Remedy: Pay
all you can
monthly.
12.
Interest
From Day One
When you
carry a
balance from
month to
month, there
is no grace
period on
new
purchases on
most cards.
The 20-25
day grace
period where
no finance
charges
accrue does
not apply
when you
don't pay in
full each
month.
Remedy: Find
cards that
exclude new
purchases
when
calculating
interest. |
