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Beware of credit card tricks and save dollars

January 16th 2013

The new credit card act has brought about certain positive changes in the credit card industry. The act is being considered as a means to restrict the card issuers from charging unfair interest rates and fees. However, it is quite understandable that the credit card companies will look for ways to make more profit and will resort to various tricks to empty your wallet.

The credit card companies use all sorts of tricks to rob you of your hard-earned money and maximize their margin of profit. While you can argue that these tricks are grossly unfair, you can hardly do anything as they are often legal and comply with the terms of the agreement. Thus, it is best to keep yourself aware of these tricks to avoid falling into the traps laid by these credit card companies. Given below are some of the sneaky tricks these companies use to trap customers:

1. Late fees in a few minutes: Late fees are a good source of income for these credit card Companies. They charge you late fee even if you are late by just a minute or two. You may think that the due date for your payment is, say, 5th of the month. But if you inspect closely, you may find that the payments are actually due by a certain time. If you make payment on the due date, but you are past that particular time, you will be subject to late fees and a probable increase in interest rate.

However, the recent credit card act does address this issue to some extent. The particular time by which you need to make the payment on the due date has been extended from 2 p.m. to 5 p.m. So, if you make payment before 5 p.m., you cannot be charged late fees. In case the payment is due on a day which is a weekend or a holiday, you cannot be subject to late fees. Moreover, the credit card company is now required to send you statement at least 21 days before the due date. So, it is advisable that you send in your payment ahead of the due date to avoid any problem.

2. Sudden change in address: At times, credit card companies change their payment P.O. Box all of a sudden. Unaware of this change in address, consumers send the payment to the old address. So, by the time the payment reaches the new address, they are late on your payment and are liable to pay late fee.

If you do not want to fall prey to this trick, check the mailing address of the company on your monthly statement. If required, call the company to verify their address.

3. Over-the-limit fees: You may try hard to not go over the limit, but your card company may trick you to go over the limit. You may apply for a credit card with high- credit limit to transfer balance in order to pay off a high- interest credit card. But the card company may give you a low- limit credit card and transfer as much of your balance as possible. As a result, when you use it you could find your card already maxed out.

Nevertheless, you can get some relief from this credit card trick under the newly enacted credit card laws. Under the new act, the credit card issuers must get your approval before processing any transaction that puts your account over the limit. However, you should always remain alert regarding as these companies are known to violate the laws.

4. Cash advance rate and fees: The card companies may tempt you to take cash out of your credit card. But you should think twice before taking out cash advance. The interest rate for cash advances is quite high. You will also have to pay cash advance fee. There will not be any grace period and you will have to pay interest straightaway.

5. Balance transfer fees: When you have high- interest credit cards and you are finding it difficult to pay them off, transferring balance to a low- interest credit card could be a good idea. But, before you do so, check out if there is a fee for transferring balance. You should also check out how long the low- interest rate lasts. Otherwise, you might just be surprised when you are hit sky-high interest rate and fees on balance transfer.

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