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Friday, March 29, 2024

    5 Dirty Tricks Credit Card Companies Like to Play

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    While your credit card company may claim to have your best interests in mind, the reality is that they often have loopholes in their policies that allow them to profit at your expense.

    To protect yourself, it’s crucial to be informed and aware of the following credit card strategies to monitor your interest rates and avoid penalties:

    1. Watch out for shrinking or disappearing grace periods. Previously, there was a 30-day grace period to pay your debt without incurring interest. However, many credit cards now offer only 20 or 25 days, or even none at all, resulting in interest charges from the moment of purchase until the balance is paid in full.

    2. Understand when the interest starts accruing on your card. Knowing this information can help you make purchases without incurring immediate interest charges. The longer the grace period, the better.

    3. Fixed interest rates are sometimes flexible. While a credit card may advertise a fixed interest rate, it can be changed by the credit card issuer at any time with just a 15-day notice to the cardholder.

    4. Pay attention to the messages from your credit card companies. They sometimes send confusing or misleading communications, hoping you will need more clarification on them. Take the time to read and comprehend any correspondence you receive.

    5. Late payments can result in multiple penalties. In addition to the late payment fee, which can be as high as $35, another penalty fee may be charged if a payment is more than 60 days overdue. This penalty fee is treated as a new interest rate and can reach exorbitant levels, often up to 29.99%.

    6. Familiarize yourself with the details outlined in the Act. The penalty fee should be eliminated after six consecutive on-time payments, as mandated by the Card Act of 2009.

    7. Late payment penalties can extend to your other credit cards. Even if you’ve always been on time on those cards, one late payment can trigger penalty fees on all your credit cards, leading to significantly increased interest rates.

    8. Paying your bills on time is crucial. Late payments can increase interest rates and negatively impact your credit score. Stay disciplined and ensure timely payments to save money and maintain a good credit rating.

    9. Be cautious with balance transfers. While credit card companies may send balance transfer checks, be aware that they often come with a three to five percent fee. Before making a decision, consider the costs.

    By being mindful of these tactics, reading the fine print, and avoiding late payments, you can protect yourself from falling victim to the strategies employed by credit card companies. Remember, their goal is to maximize their profits, so make it a priority to stay informed and handle your financial obligations responsibly. You can build and maintain excellent credit by consistently making full payments and carefully reviewing contracts.

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