Credit Cards Secret Traps – Ways to Avoid Them
The credit card secret traps are those parts of this piece of plastic that won’t let you get rid of a debt. The purpose of the crediting companies is to make you carry the biggest balance that you can possibly pay back.
Avoiding the credit card secret traps can be tricky due to the fact that the credit card companies will permanently increase the credit limit and will offer privileges so that you will be tempted to get charged even more without realizing it. The fact that credit card companies can be very creative regarding the interest rates and the fees they apply is the point where you can get into trouble, financially speaking.
Hereunder are some credit card secret traps that you need to avoid when reaching for the terms of a credit card company:
1. Two cycle billing – the method of two cycle balance is called for when the interest on the average daily balance is inserted into the computer using the purchases made in that specific billing cycle and the charges applied the month before.
No matter if your balance has been paid off the month before, the same figure will be used along with the current purchases made per month and as such the average daily balance to be calculated. In this way the debt can be kept valid for a long period of time.
2. The credit card grace period – this refers to the number of days left before the credit card company will begin charging interest on new purchases. Most of the cards have a grace period but some do not have, so stay away from those which don’t have it. The ones with no grace period will calculate interest for the new purchases wit the very first day you start using the card for these purchases even if the billing is paid in full.
3. Cash advances – these ones are given without a grace period which means that you will start paying interest the very first day you’ve got the advance. These interests are usually higher than the common rate that is applied on card purchases.
4. Credit card late fees – it can happen so that the credit card companies to apply a penalty for the overdue balances, but also in case you violate the credit cards terms even if you haven’t missed any payment on them.
5. Interest rate changes – these ones can occur whenever the credit card company considers appropriate, provided that you will be given 15 days notice. Read every mail of your credit card company as many of them will do it thinking that you will not catch it.
So, as a conclusion – read all the time the small print that appears in the credit card terms especially the ones regarding the billing methods, grace period and the interest rates and fees. Also consider the way you will use the credit card and choose the crediting company according to this aspect in order not to fall into these credit card secret traps.