12 Credit Card Secrets That Issuers Don't Want You

1. INTEREST BACKDATING

Most card issuers charge interest from the day a charge is
posted to your account if you don't pay in full monthly. But,
some charge interest from the date of purchase, days before they
have even paid the store on your behalf!

REMEDY: Find another card issuer, or always pay your bill in
full by the due date.

2. TWO-CYCLE BILLING

Issuers which use this method of calculating interest, charge
two months worth of interest for the first month you failed to
pay off your total balance in full. This issue arises only when
you switch from paying in full to carrying a balance from month
to month.

REMEDY: Switch issuers or always pay your balance in full.

3. THE RIGHT TO SETOFF

If you have money on deposit at a bank, and also have your
credit card there, you may have signed an agreement when you
opened the deposit account which permits the bank to take those
funds if you become delinquent on your credit card.

REMEDY: Bank at separate institutions, or avoid delinquencies.

4. FEES ARE NEGOTIABLE

You may be paying up to $50 a year or more as an annual fee on
your credit card. You may also be subject to finance charges of
over 18%.

REMEDY: If you are a good customer, the bank may be willing to
drop the annual fee, and reduce the interest rate -- you only
have to ask! Otherwise, you can switch issuers to a lower-
priced card.

5. INTEREST RATE HIKES ARE RETROACTIVE

If you sign up for a credit card with a low "teaser" rate, such
as 7.9%, when the low rate period expires, your existing balance
will likely be subject to the regular and substantially higher
interest rate.

REMEDY: Pay in full before the rate increase or close the
account.

6. SHORTENED DUE DATES

Most card issuers offer a 25 day grace period in which to pay
for new purchases without incurring finance charges. Some banks
have shortened the grace period to 20 days--but only for
customers who pay in full monthly.

REMEDY: Ask to go back to 25 days.

7. ELIMINATING GRACE PERIODS

That fabulous offer you received in the mail for a gold card
with a $10,000 credit limit, and lots of features may not be so
great. The most common "string" attached is the card has no
grace period. You are charged interest on everything from the
day you buy it, even if you pay on time.

REMEDY: Throw the offer out!

8. DISAPPEARING BENEFITS

Many banks enticed you to sign up with extra benefits such as
lifetime warranty, a 5% discount on all travel, or protection if
an item purchased is lost. Now, some banks have cut back on
these extras without the fanfare that launched them.

REMEDY: Read annual disclosure of changes, and switch cards if
need be.

9. DOUBLE FEES ON CASH ADVANCES

Most credit cards impose both finance charges and a transaction
fee on cash advances. Interest starts from the day of the
advance, and the transaction fee can be up to 2.5% of the amount
taken. Beware of cards advertising "no finance charges."
Transaction fees may still apply.

REMEDY: Limit cash advances.

10. FEWER RIGHTS ON DEBIT CARDS

Some Visa and MasterCards have payments deducted directly from your
checking account (debit cards). Under federal law, you technically
don't have the same right to "charge back" problem purchases as you
do with a conventional credit card. Also, if the card is lost or
stolen, you can have up to unlimited liability for losses if you
don't report the problem within 60 days, which is different from the
$50 maximum liability on credit cards. (Exception: the $50 limit
applies to debit cards as well as to credit cards in Massachusetts.)

REMEDY: Know your card. Is it a credit cards or debit cards? They
may look alike.

11. MISLEADING MONTHLY MINIMUMS

You may think it is beneficial to have a card where you only
need to pay 2%-3% of your balance monthly. It is just the
opposite. The bank stands to make far more money from finance
charges the longer you carry out payments--and you foot the
bill.

REMEDY: Pay all you can monthly.

12. INTEREST FROM DAY ONE

When you carry a balance from month to month, there is no grace
period on new purchases on most cards. The 20-25 day grace
period where no finance charges accrue does not apply when you
don't pay in full each month.

REMEDY: Find cards that exclude new purchases when calculating
interest.