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Thanks to Consumers Union (the Consumers Reports people) for this list of traps that cause your credit card bill to not behave the way you expect.
1. Universal Default - You’re late with any bill and the credit card company raises your rate. You don’t have to be late with their bill – any bill will do. The default rate is usually quite high – like 30% or more.
2. Change of terms – The issuer can change the terms at any time, and those little notices they stuff in with the bill with lots of little print may seem so meaningless and easy to lose.
3. Teaser rates – the low rate your card had when you signed up may expire. Maybe it lasted for 6 months, maybe 12, but what happens after that?
4. Minimum payment – yeah right. If you pay the minimum you can avoid the late payment fee, but you’ll be paying finance charges forever. You may never be able to actually pay off the balance if all you pay is the minimum payment.
5. On time payment – you may mail the check before the due date, but the issuer has a strict time on when they have to receive it in order to be counted as “on time”. If the “check is in the mail” they might still count is as late. A quick phone call to the issuer might work to reverse the charge if this is not a regular practice for you.
6. Double cycle billing – you need to pay off the balance in 2 billing cycles in order to avoid interest. Three of the 6 largest credit card issuers use this method.
7. Cash advance / Convenience checks – the interest rate on these items is higher than using your card. Avoid doing this! Ask your bank to stop sending convenience checks.
8. Penalty interest rates – late payments can trigger penalty rates driving your rate from 7% to 30%
9. Fees…. – there’s a fee for everything – pay-by-phone, foreign country transactions, ATM fees, statement fees, you name it. If the issuer can get away with charging a fee, they will.
10. Balance Transfer – the lowest interest rate balance gets paid first, so if you transfer a balance and continue to use the card, the lower interest balance will get paid first.
1. Universal Default - You’re late with any bill and the credit card company raises your rate. You don’t have to be late with their bill – any bill will do. The default rate is usually quite high – like 30% or more.
2. Change of terms – The issuer can change the terms at any time, and those little notices they stuff in with the bill with lots of little print may seem so meaningless and easy to lose.
3. Teaser rates – the low rate your card had when you signed up may expire. Maybe it lasted for 6 months, maybe 12, but what happens after that?
4. Minimum payment – yeah right. If you pay the minimum you can avoid the late payment fee, but you’ll be paying finance charges forever. You may never be able to actually pay off the balance if all you pay is the minimum payment.
5. On time payment – you may mail the check before the due date, but the issuer has a strict time on when they have to receive it in order to be counted as “on time”. If the “check is in the mail” they might still count is as late. A quick phone call to the issuer might work to reverse the charge if this is not a regular practice for you.
6. Double cycle billing – you need to pay off the balance in 2 billing cycles in order to avoid interest. Three of the 6 largest credit card issuers use this method.
7. Cash advance / Convenience checks – the interest rate on these items is higher than using your card. Avoid doing this! Ask your bank to stop sending convenience checks.
8. Penalty interest rates – late payments can trigger penalty rates driving your rate from 7% to 30%
9. Fees…. – there’s a fee for everything – pay-by-phone, foreign country transactions, ATM fees, statement fees, you name it. If the issuer can get away with charging a fee, they will.
10. Balance Transfer – the lowest interest rate balance gets paid first, so if you transfer a balance and continue to use the card, the lower interest balance will get paid first.
What devil's representative thought of this clause?
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