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If you think that you know everything there is to know about your credit card, then you could be in for a rude awakening. Credit card providers make untold billions of dollars annually because of several closely guarded secrets that they won't easily share with you. By keeping you in the dark they can make money at your expense. Don't be beaten down as I am about to shine the light in the darkness to expose trade secrets that they hope you will never learn about.
Congratulations, you have been approved for a new major credit card! However, do not let the headiness of having a better than average credit rating skew your judgment: now is the time to get very familiar with the credit card agreement that came along with your new card.
Firstly, are you being charged an annual fee? If so, you are paying for the privilege of using a card that should not cost you one red cent until you actually buy something. The prestige of that platinum card is all smoke and mirrors; chances are the same card you are holding in your hands didn't cost your neighbor anything. Contact the credit card company and ask them to waive their annual fee.
Secondly, an introductory annual percentage rate [APR] of 0% sound great on the surface. However, how long will that introductory term last? Will your new purchases automatically climb to the inflated regular rate once the honeymoon period is over? Or, will the initial APR stay the same until your balance is paid off?
Thirdly, balance transfers are a great thing to have but only if the credit card company offers to you two things:
1. No transfer fees on balance transfers. Look closely at your statement and you could discover that a 3% transfer fee has been charged on your $5000 transfer -- that's an extra $150 you must shell out for the privilege of moving your money from one credit card to another one!
2. Low APR, but for how long? If you transfer your funds to the new card will the transferred balance stay at the fixed rate or evaporate once the introductory period has ended? On the surface, a 2.9% APR on balance transfers sounds good, but if that rate jumps up to 17.49% once the introductory period is over it becomes a good deal that has gone bad. Unless, of course, you pay off the debt before the jump in the card's interest rate occurs.
Fourthly, you do have a grace period with your card don't you? If you purchase something today will interest begin to accumulate immediately or will you get up to 25 days to pay off your balance interest free? Some credit card offers are reducing or even eliminating the grace period.
Fifthly, what sort of rewards program is attached with the card? What, you didn't know that they offered to you a rewards program? Chances are you may have to sign up for this program separately. Big note: no rewards program is worth it if you run a monthly balance, which is how the credit card companies make big money off of you. The value of your rewards will quickly be cancelled out if you don't pay off your card every month.
Sixthly, are you paying your card through online banking? If so, make sure that the funds are paid to your credit card company several days in advance of the due date. Otherwise a $39 penalty charge could be assessed to your account. If paying by mail, send out payment 7-10 days before the due date. You may think that your payment is going to your Virginia bank's local payment center when it will, instead, be sent to a South Dakota post office box. The two day difference in mailing time could spell the difference between your card getting their on time or being late.
Seventhly, will one late payment to your account change the original terms of your agreement? That 11.9% interest rate you enjoyed could suddenly jump to 23% even 30% or more if you are late just once with a payment. Don't take a penalty APR lying down; contact the credit card company and politely insist that they remove the penalty interest rate at once.
No credit card is worth it to you if the credit card company socks you with a huge APR, annual fees, penalty fees, and the like. Read the updated terms of agreement that will come in the mail with your card from time to time to learn what terms they changed unilaterally. If something has been changed that works against you, contact the credit card company and tell them that you reject their changes. They may threaten to close your account, but if they do simply move on to another hungry credit card provider as there are thousands of them out there.
Finally, pull your free copies of your annual credit reports at AnnualCreditReport.com. Take care of the errors and make certain that no unwarranted negative reports are included with your report. Pay a few extra dollars and you can obtain your credit scores too. Your credit score is the ultimate number that determines the interest rate you will pay on every loan.
You don't have to let industry secrets cause you financial hardship; fight back by becoming a fully informed consumer today!
(c) 2006; You may republish this article to your website with the following author resource information and link left intact. |
| Author: Matthew C. Keegan |
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Author Bio:
Matt manages the Corporate Flight Attendant Community at www.corporateflyer.net and www.cabinmanagers.com in addition to the Aviation Employment Board at www.aviationemploymentboard.net |
| This article can be searched using: free credit report, free credit reports, free annual credit report, annual credit report |
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