Thursday, July 26, 2012, AM | 3 Comments
Americans can’t live without their credit cards. They don’t go out without them. That is fine as long as they don’t accrue credit card debt that they can’t get rid of. Americans seem to be back in the habit of free spending using their cards.
Credit card lenders are happier than ever. Obesity is bad for humans but consumers are once again putting money in lenders’ already swollen bellies. They ought to be happier than ever.
No matter you are a newbie like a student or an expert in spending freely, you can be sure the lenders one day will get you for this.
Before you sign up for a new credit card, read and read again the fine prints. If you don’t, you give the lenders free hand in charging the interest you never expected and the amount of the late fee if you miss the due date.
Be aware of the following credit cards fine print traps:
The 0% introductory APR
You have to be extremely careful not to fall for this trap. It may not be a trap if you really understand it.
Most probably this 0% introductory APR is for transfer only. Once you do that, the question is how much would the credit card issuer charge in interest when you make a new purchase – perhaps an arm and a leg.
This may be good for folks who need to transfer the account but have decided to pay for new purchases before the due date and in full.
Late fees or penalty fees
The 0% APR evaporates and is replaced with as much as 30% if you are late in paying two consecutive payments on top of late fees generally between $15 and $30.
Fixed rate APR
Fixed rate APR does not mean the lender will charge you one fixed rate no matter what. It simply means you have the right to be informed before the lender makes changes in interest rate.
Inactivity or spending less
Almost everyone has seen the “the no annual fee.” That’s Okay as long as you have reached (spent) the preset annual spending on the credit.
If you spend less, then the lender has the option of charging annual fee, generally between $35 to $50.
The minimum payment is simply a set percentage of your balance. Experts warn that making the minimum payment every month will take you approximately four times as longer than making a fixed payment that you would and should have set for yourself.
This way you would not waste money on interest and would avoid carrying debt for a longer period of time.
The issuer will most probably waive off the annual fee for the first year only. After that, it’s conditional.
In a Nutshell
When it comes to credit cards, always think and slow down at the yellow light. That means you must proceed with caution.
The best way to proceed with caution is to read the fine prints carefully before signing your new credit card agreement.
Be aware. Keep an eye on purchases and prices, know your credit card terms, and watch your statements carefully.Facebook.com/doable.finance