Avoid credit card traps - identify hidden costs

These days credit card or plastic money is very popular and used extensively. It is indeed of great utility if used in a calculative manner. But you need to be aware of some obvious disadvantage related to credit cards. Remember, with every purchase that you make with a credit card, you add a credit amount to your account. Sometimes is also quite shocking to find an interest rate of 18% related to your credit card. This compels you to look for cards with lower interest rates.


In most cases you consider your credit card as a lucrative item because it offers you the following:

  • 0% interest for the first six months *
  • No annual fees *
  • A low fixed rate of only 8.9% *

Conditions apply:

With the above three offers, everything seems perfect about the offer of a credit card. No doubt everybody would love to possess it. But unfortunately most of us don't see those * items, which says conditions apply. This suggests:

  • Unless you count the deferred interest we will charge you provided the payment of the full balance transfer amount is not done once the promotional period ends.
  • We charge for late payments and evaluating your balance. We also charge for cash advances, balance transfers, memberships, reward programs, etc.
  • The rates are fixed for the first month. But later, on evaluating your balance we may change the prime rates without notice. This may happen also due to late payments or because we need to extract more money from you.
  • A payment will be considered as late payment if we don't receive it within the scheduled time period. No excuses will be entertained even if you have mailed us earlier.

Solutions:

  • Read the entire fine print carefully. If you are not clear on something ask someone else what they think it means. Ask an attorney friend, CPA (certified public accountant), financial planner, banker or other person in the financial industry.
  • Don't apply for a card unless they tell you what your actual rate will be. This is difficult because most of them do not intend to tell you the actual facts. Generally you will need to know your credit scores and have a copy of your credit report handy. Try to find a card that gives you a confirmed rate before you apply. A reputed credit card company will first request a copy of your credit report from one of the credit bureaus before quoting you a rate. Look on http://www.bankrate.com for current rates offered by various credit card companies and banks. Often smaller banks and companies offer better deals and are not as hard to deal with. Check with your local banks also. At least with a locally issued credit card; you know where the company is located.
  • Always mail your payment at least 7 days before it is due.You can also try paying through the Internet. Many companies now offer online payment method. It can also save you time and stamps.
  • Check your statement every month and make sure you are having the same interest rate you signed up for. If your rate has been increased, look for a late payment fee, or some other reason for the increase. Call the company and ask them why they increased your rate. If your rate was unjustly increased (they processed the payment late or credited it to your account late, but it was not received late) then ask them to change your rate back to what it should be.

Often we tend to be careless and end up being in debt. If you are in similar circumstances and undergoing debt problems, feel free to depend on us. Debt consolidation is a much better way to get rid of your debts and we are experts in this field. Trust in us and we will help you to achieve a debt free life without anxieties.