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12 Credit
Card Secrets... Page 2
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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 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 annual disclosure of changes, 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 ON DEBIT CARDS
Some Visa and MasterCards have payments deducted directly from your checking account
(debit cards). Under federal law, you technically don't have the same right to
"charge back" problem purchases as you do with a conventional credit card. Also,
if the card is lost or stolen, you can have up to unlimited liability for losses if you
don't 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.
Commonwealth of
Massachusetts Office of Consumer Affairs and Business Regulation 1 Ashburton Place, Room
1411 Boston, MA 02108. E-Mail: consumer@state.ma.us
Credit and Debt Calculators:
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• Should I pay off debt or
invest in savings?
• What will it take to pay off my balance?
• Should I consolidate my
debts?
• How Much Am I Spending? |
