You’re probably unaware of it, but the credit card companies can use some sneaky tactics on occasion to try and squeak out a few more days of interest charges every month. This may not seem like much over a short period, but this interest will add up over time and you will be paying a considerable amount more in finance charges than you need to . Check out these tips on how to avoid getting taken advantage of by some of the major credit card issuers on the market. Be sure to check out our list of best balance transfer credit cards with no fee.
1. Interest Backdating
Most card companies charge interest starting the day a purchase hits your card account, if you don’t pay off the balance in full. However some credit card companies start charging interest from the day of the purchase, even before they’ve paid the merchant. This can end up costing you a considerable amount in interest charges over the years.
SOLUTION: Find another credit card company, or make sure to pay off your balance in full each month
2. 2-Cycle Billing
Companies which make use of this process of computing interest, charge w months worth of interest for the first month you neglect to pay your entire balance in full. This generally occurs only if you change from paying your monthly balance in full to carrying a monthly balance on your account.
SOLUTION: Find a credit card company that does not calculate interest in this manner or continue paying off your balance each month in full. Or consider using a pre paid credit card as an alternative.
3. The Right To Set-off
If you have a credit card with a bank as well as a savings or checking account, you may have unwillingly signed a contract to allow the bank to take funds from your checking/savings account to cover any delinquent credit card balances.
SOLUTION: Keep your banking and credit card companies separate, or prevent making late payments on your credit card balance.
4. Credit Card Fees
You might be spending up to $100 annually as a fee on your credit card. You might even be subject to interest rates of more than 18%.
SOLUTION: If you’re an excellent customer, the lender might be agreeable to decrease the yearly charge, and decrease the interest-rate on your card at your request. If they won’t help, change cards to one without an annual fee and a lower rate
5. Retroactive Interest Rates
Did you know that many times when you get a credit card with a low introductory rate, if you have a balance on the card when the trial rate expires, your balance will be subject to a considerably higher rate?
SOLUTION: Pay off your balance in full before the introductory rate increases or close the card account
6. Shorter Due Dates
Most card companies offer a 25-day grace period in which you can pay off recent purchases without having to pay interest. Some banks have reduced the grace period to 20 days, but just for clients who pay in total monthly.
SOLUTION: Contact your card company and request to return to 25 days.