Credit cards are in the business of making money big money. While most of these corporations are already massively wealthy, many use sneaky tactics to get a little bit of extra cash from their customers. The following sneaky tactics can be costing you more than you realize:
1) Paying your electric bill late could increase your credit card rate even if you have a perfect record of paying your credit card on time. Blame it on a little-known term: Universal Debt. Basically, it means that credit card companies are allowed to increase your credit card rate if your credit score slips, even if your history with the credit card company is perfect. Read the terms of your charge card agreement to find out whether this may apply to you.
2) Rates go up and down more often than hemlines during Fashion Week shows. Many credit cards offer great introductory rates and then hit you with huge rate increases after a few months or if you fail to meet the credit cards terms (which are written in fine print). Rate increases can be a huge disaster if you are just barely making your monthly payments on time or if you are carrying a significant credit card debt.
3) Sneaky fees. Most cards charge extra (sometimes a lot extra) for cash advances, late payments, and other items. In some cases, it can be especially frustrating for customers to pay a credit card on time only to be charged a late fee because the bank took a few days to process the payment. Annual fees, paper statement fees, set up fees, foreign transaction fees, and reward fees can also add up. The only way to avoid these fees is to read up on the terms of your credit card yes, that will mean delving into the fine print and possibly calling your credit card company to clarify the information. Keep in mind that some fees including late fees can be negotiable. Your goal is to notice the extra fees your credit card is charging and find ways to get rid of the extra costs if you can. In some cases, that may mean changing card companies.
4) Backdating interest. Some credit card companies will charge you interest from the day you make a purchase even if the company does not post the charge to your account until a little bit later. This allows the company to charge a little bit extra each time you make a purchase.
5) Your credit card and your bank account may be more linked than you think. If you have your credit card through your bank, your bank agreement may allow the bank to withdraw money from your bank account to pay your credit card. This can be disastrous if the credit card company withdraws a large sum from your bank account, potentially leaving you without cash for other bills.
4) Your credit card may calculate interest by using Two-Cycle Billing. In this type of billing, a credit card company will charge two months of interest if you have always paid off your bill in full and then one month find you have to carry a balance.
Reading your credit card agreement — even though it may not be the most exciting thing you read– is the only way to find out whether your company is using these sneaky tactics to get more money out of you. If you do find out that you are paying extra because of the above features, consider calling your credit card company and making changes. Or, consider switching credit cards to find a card that does not nickel and dime you.
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