How To Avoid Sneaky Card Charges
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
How to Avoid Sneaky Credit Card Charges
Summary
Getting a new card with an attractive rate can seem like a great deal, especially if you have a 0% interest rate for the next six months. However, hidden fees and penalties can quickly add up, turning your great bargain into an expensive burden. Here's some advice on how to spot and avoid these sneaky card charges.
Watch Out for Benefit Removal
One of the sneakiest pitfalls isn't a charge, but the removal of card benefits. If you've secured a low APR or a balance transfer rate, don't assume it’s guaranteed for the full term. These offers often depend on meeting strict criteria. Even a minor slip?"like being one day late on a payment or slightly exceeding your credit limit?"can trigger a significant interest rate increase. This change is usually buried in the fine print, so be diligent. Understand the conditions required to maintain your deal and follow them closely.
Expect Balance Transfer Fees
While some cards offer 0% on balance transfers, they might still impose a handling fee. Even without immediate interest, transferring a balance can cost you a percentage of the amount. If your balance is low, this percentage can be substantial. Always check the fees associated with balance transfers before acting.
Understand How Payments Are Applied
Be aware of how your card issuer applies your payments. Often, they may choose to apply payments to the lowest interest balances first, allowing the higher interest balances to accrue charges. For example, if you transfer a balance of $1000 at 0% and make new purchases of $500 at 17%, the issuer might pay off the $1000 first. This means the $500 accrues interest. Look for issuers that address high-interest balances first to potentially save money.
Beware of Penalty Fees
Even with a low APR and an appealing credit limit, missing payments can result in hefty penalty fees. If your balance is $990 with a $1000 limit and your payment is late, you might incur a $25 charge. This overcharges your account, triggering additional fees. You could quickly owe $100 just for being late. Always read your contract thoroughly and understand all potential charges before signing. This will help you avoid surprise costs and make the most of your low rates.
By staying informed and vigilant, you can avoid most sneaky card charges and truly enjoy the benefits of your low-rate credit card.
You can find the original non-AI version of this article here: How To Avoid Sneaky Card Charges.
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