Hook, Line and Sinker: Things the Credit Card Companies Won’t Tell You Upfront
Hook, line and sinker. Yes, the credit card companies are trying to reel you in. More customers equals more money, and of course, they certainly like that. Who wouldn’t? Does this man you should steer clear of credit cards altogether? No. Absolutely not. Having a credit card or two in your possession can e very beneficial..
Credit card companies put enticing offers out there and don’t give you all the facts up front. That’s the way it goes with advertising. If you fail to read the fine print, you are ultimately responsible for the outcome. The credit card company is not going to take any blame for you’re lack of knowledge about something just because they failed to tell you. Truth be told, it’s not their responsibility to tell you every little thing upfront. A smart and savvy consumer will read everything and be in the know before they ever use that little plastic card. Here’s a few things to watch out for that could make a difference in saving money or breaking the bank to pay off your card.
0% APR
0%? Not even close. This might apply to balance transfers only. You might get a card that allows 0% APR on both balance transfers and purchases. Either way, it is an introductory rate. There will be hidden fees for using the card for other things, like cash advances, and you payments will only be applied to our lower interest balances until they are paid off, leaving you with more debt to pay. To top it off, that 0% APR is literally only an introductory rate. After the first few months to one full year, you’re going to get slapped with a bill that might reflect interest rates of a caliber you were not expecting. Read and get to know the terms on such a card. Use it wisely to avoid a lot of debt. To avoid this eventuality altogether, look for a card offering a low fixed-rate APR. These do not change over time and will only change with your renegotiation or failure to pay.
The Universal Default
Thought your rate was secure with your card once you got it? Thought your subsequent debt with other creditors would make no difference? Think again. If you wind up with ad debt with another creditor and if affects your overall credit rating, paying your credit card ill in full and on time might not make a whole lot of difference. You should still pay the bill, of course, but when the credit card company catches wind of any issues on your credit report (and they will!), this is their excuse to raise your rates. Even being a good customer to them does not change their view that you might now be a high-risk customer.
Paying the Minimum Balance
While this can be a life-saver in your time of need, don’t make it a habit. Some companies offer a minimum payment of as little as $10 per month. if you only pay this amount every month, you are not going to make much of a dent in your debt. On top of general card use, you’re going to have fees and interest that accrues every single month. Not only will it take you a very long time to pay off the debt, you will wind up paying a whole lot more in the long run. The minimum balance payment is great in a pinch, but it can also lead to more trouble than it is worth.
Rates and Terms
Don’t ever make the mistake of thinking that your rates and terms are set in stone and are thus unchangeable. Nothing could be further from the truth! Card companies can change their policy at their own whim and discretion, giving you little notice to prepare for said changes. However, you might be ale to work these things out in your own favor. Should the credit card company alert you of impending changes, try taking advantage of term flexibility. If you have proven track record with the company and have been in good standing for a couple of years, call them and try to renegotiate the rate. It never hurts to ask!
Knowing these things in advance will, hopefully, help you to become a more educated and sophisticated credit card user; avoiding higher debt and reaping the benefits of plastic.
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