Sneaky Credit Card Charges to Avoid

When applying for credit cards, you are usually faced with mile long terms and conditions. You think you already know everything that involves your card so you disregard these documents. Then come payment time, you are shocked with the mountain of debt you have supposedly acquired. You thought it was a mistake. You certainly did not know about all the charges stated on your bill. So you call for assistance and complain about the mistake. Then to your surprise, they tell you that the charges are legal. They were all stated in the documents provided to you at the beginning.

Disregarding the writings on the contract is one of the top common mistakes consumers do. The barely comprehensible legalities written all over it are just a bore to read. What you failed to realise though is that all of the sneaky charges are lurking within these sheets. But to help you simply understand them, we’ll help you cut to the chase. Here are some things you need to know:

Bill Payment Charges

It is becoming more common for consumers to pay bills online and via phone. But you must know that every transaction of payments charges additional fees. They are often disguised as service fees so do not be surprised if you pay more than you have anticipated. So if you can, pay your bills by mail. This may be old school but you are cutting costs.

Introductory Rates

These rates are always appealing if you are best credit card hunting. A lot of credit cards show off low interest rates so commonly you go for the lowest one. But do be careful of these pit falls. These are traps you should be well-aware of. Before jumping to a low interest rate card, find out until when this offer lasts. Know that these rates expire and that the preceding interest rates are unbelievably high. Some are also retroactive so just imagine your debt when this happens to you.

The solution for this then is purchasing and repaying in full before the introductory rate expires. This is also the case for balance transfer credit cards.

Penalty Charges

You might be new to this but as usual, late payments cause penalty charges. This is sky-high amounts of charges. Commonly, for a 6-12% APR, the penalty rate is 23%. It will only fall back to normal when you are becoming an on-time payer. However, you should keep this up for, say, six months.

Universal Default Clause

This is a sad and unfortunate fact. Credit card providers are allowed for dramatic increases in their interest and penalty rates. This is when you made a late payment. So avoid making late payments. Handle your finances well as much as you can.