We don't want to say the credit card companies are out to screw you...but sometimes it can sure feel that way (like how banks have recently increased their interest rates and fees, and all that fine print that no human could possibly understand).
Here, a few pitfalls to be on the lookout for when you sign up for a new card or think about transferring a balance.
Check the grace period. In the good old days, cards gave you 30 days after making a purchase before they charged interest. Now the average is only 23 days--and some cards have none. Only sign up for a card with at least 25 days.
Careful when transferring balances. If you’re planning to transfer your high-interest card balance to another, lower-rate card (smart), just make sure you won’t get charged a transfer fee for making that purchase. For example, if you transfer $10,000 of debt, you may accrue a $300 (three percent) fee--one you’ll be paying off at the new card’s APR.
Pay your balance on time every month. This one is easy. A late payment gets you fined up to $35. Stupid.
But don’t pay too early. Let’s say you pay double your minimum balance, thinking you can skip the next month’s payment. That lump sum actually counts as one payment, and you’re still responsible for paying on time the next month.
Ask if your card has an early cancellation fee. If it does, you’ll need to keep a balance on the account to avoid paying for nothing.
Ask for a better APR. Let’s say you’ve gotten a raise, landed a windfall or maintained six months or more of perfect on-time bill payment. It’s time to call your credit card company and brag about your accomplishments, saying you’ve earned a lower interest rate. Also, let them know you’d hate to have to take your business elsewhere.
Avoid the foreign transaction fee. Travel internationally? Some cards slap an extra fee on every exchange done in a foreign currency.
Stay away from cash advances. With their higher interest rates, no grace periods and mandatory transaction fees, just…don’t.
Avoid over-the-limit fees. Even if you’re $1 over your limit, you can get charged up to $35. Find out your limit and stick to it.