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Credit card secret traps are the hidden side
of plastic that keeps you in debt that is
difficult to pay off. The main objective of
credit card companies is for you to carry the
largest balance you can possibly repay.
Trying to avoid these credit card secret
traps is tricky because credit card companies
constantly raise your credit limit, and offer
you perks to get you to charge even more.
Credit card companies can get very creative
with fees and interest rates and that's where
you can get into financial trouble. To avoid
this from happening here are some common credit
card secret traps to be aware of when you
compare credit card company terms.
Two Cycle Billing
The two cycle balance method is where the
interest on your average daily balance is
computed using both your purchases from that
billing cycle and charges from the month
before.
Even if you paid off your entire balance
from the month before, that figure is still
used along with your current month purchases to
calculate your average daily balance. This
credit card secret trap can keep you in deep
debt for decades.
Credit Card Grace Period
A credit card grace period is the number of
days before the credit card company starts
charging you interest on new purchases. Most
cards have a grace period but beware of the
cards that don't.
If you have a card with no grace period, you
always pay interest on new purchases from the
day you make the purchase, even if you pay your
bill in full.
Cash Advances
You almost never get a grace period for cash
advances, which means you begin paying interest
on that advance right away. Also, the interest
rates on cash advances are typically higher
than the ordinary rate on card purchases. A
cash advance is costly and one of the most
common credit card secret traps.
Credit Card Late Fees
Credit card companies can impose hefty
penalties on any balance that you pay late or
balances that exceed your limit. But the
penalties of credit card late fees don't end
there.
If you violate even one of your credit cards
terms, other credit card companies may also
punish you with penalty rates even if you have
never missed payments on them.
Interest Rate Changes
Credit card companies are allowed to change
your interest rate anytime, provided they give
you 15 days notice. So read what your credit
card company mails you because some companies
will sneak this by hoping you won't catch
it.
The bottom line is read the small print in
the credit card terms provided by the card
issuer regarding the credit card company rules
concerning the billing method, grace period as
well as the interest rates and fees.
Also, think about how you will use the card,
especially if you expect to carry a balance.
Then, compare credit card company terms and try
to choose the card that keeps you from falling
into these credit card secret traps.
Copyright © 2005 Credit-Repair-Facts.com.
All Rights Reserved.
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