Under the Federal Law, credit card companies are required to disclose all its fees and terms to its holders. Nevertheless, what you read in the fine print may not be the complete details of what you should know. In this article, let’s tackle some of the things about your credit card that the disclosure may not be telling you.
Transfer Fees. A credit card may offer a zero interest rate for balance transfers but what about the fees? How much would be charged each time you transfer over a balance from one of your cards? Most credit cards carry a 3% - 5% balance transfer charge. That means, if you’re going to transfer a balance of $500, you could be paying $15 to $25 per transaction. When choosing a balance transfer credit card, don’t forget to check out the transaction charges.
Two-Cycle Billing. With the two-cycle billing method, your interest rate is calculated based upon your current charges and your charges for the previous month. Even if you’ve already paid off your last month’s balance, it would still be considered. Best go with credit cards that use the adjusted balance method to avoid high interest.
15-day Notice. If you read your credit card agreement, you may notice a statement that says your credit card company has the right to change your current rates and fees, as long as you’re given the 15-day notice. How often do you check your account? Do you make it a habit to check the mails that your credit card company sends you? If not, you could already be charged with additional costs on your account without your knowledge.
Lower minimum payments mean higher costs. Some cards may allow lower minimum payment which means you don’t have to pay off your entire balance for the month. In the past, credit cards require at least 5% minimum payment but today, some cards even allow payments as low as 2%. This may seem like a great deal but consider the consequences. Remember, submitting only the minimum due also means prolonging your debts and paying more on the additional interest rate charges.
The Universal Default Clause. If you credit card issuer practices the universal default clause, you should be aware that you can get penalized with higher rates and fees even if you’re timely with your credit card payment if you missed a payment on one of your credit cards or one of your creditors.
Very short grace period or none at all. Have you checked the length of grace period that your credit card offers? Before signing up, don’t forget to check on this very important feature. Ideally, your credit card should give you at least 25 to 30 days of “grace period”. This gives you ample time to pay off your balances without incurring the additional interest fees.
However, even if your card offers a sufficient length of grace period, take note that it does not cover cash advances. If you use your credit card as an ATM, you will automatically be billed with the interest at the moment you took the cash advance.
Allison May is a credit consultant and a writer for
Credit Creators. The resource provides consumers with valuable advice and information on credit cards for bad credit,credit cards for good credit and other credit-related issues. Its main objective is to help people
build good credit.
