Credit Card Secrets

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Most card issuers charge interest from the day a charge is posted to your account if you don't pay in full monthly. But, some charge interest from the date of purchase, days before they have even paid the store on your behalf!

Credit Card Secret: Find another card issuer, or always pay your bill in full by the due date.

Issuers which use this method of calculating interest, charge two months worth of interest for the first month you failed to pay off your total balance in full. This issue arises only when you switch from paying in full to carrying a balance from month to month.

Credit Card Secret: Switch issuers or always pay your balance in full.

If you have money on deposit at a bank, and also have your credit card there, you may have signed an agreement when you opened the deposit account which permits the bank to take those funds if you become delinquent on your credit card.

Credit Card Secret: Bank at separate institutions, or avoid delinquencies.

You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of over 18%.

Credit Card Secret: If you are a good customer, the bank may be willing to drop the annual fee, and reduce the interest rate -- you only have to ask! Otherwise, you can switch issuers to a lower- priced card.

If you sign up for a credit card with a low "teaser" rate, such as 7.9%, when the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate.

Credit Card Secret: Pay in full before the rate increase or shop for a better rate

Most card issuers offer a 25 day grace period in which to pay for new purchases without incurring finance charges. Some banks have shortened the grace period to 20 days--but only for customers who pay in full monthly.

Credit Card Secret: Ask to go back to 25 days.

That fabulous offer you received in the mail for a gold card with a $10,000 credit limit, and lots of features may not be so great. The most common "string" attached is the card has no grace period. You are charged interest on everything from the day you buy it, even if you pay on time.

Credit Card Secret: Shop for better offers.

Many banks enticed you to sign up with extra benefits such as lifetime warranty, a 5% discount on all travel, or protection if an item purchased is lost. Now, some banks have cut back on these extras without the fanfare that launched them.

Credit Card Secret: Read annual disclosure of changes, and switch cards if need be.

Most credit cards impose both finance charges and a transaction fee on cash advances. Interest starts from the day of the advance, and the transaction fee can be up to 2.5% of the amount taken. Beware of cards advertising "no finance charges." Transaction fees may still apply.

Credit Card Secret: Limit cash advances.

Some Visa and MasterCard's have payments deducted directly from your checking account (debit cards). Under federal law, you technically don't have the same right to "charge back" problem purchases as you do with a conventional credit card. Also, if the card is lost or stolen, you can have up to unlimited liability for losses if you don't report the problem within 60 days, which is different from the $50 maximum liability on credit cards. (Exception: the $50 limit applies to debit cards as well as to credit cards in Massachusetts.)

Credit Card Secret: Know your card. Is it a credit cards or debit cards? They can look alike.

You may think it is beneficial to have a card where you only need to pay 2%-3% of your balance monthly. It is just the opposite. The bank stands to make far more money from finance charges the longer you carry out payments--and you foot the bill.

Credit Card Secret: Pay all you can monthly.

When you carry a balance from month to month, there is no grace period on new purchases on most cards. The 20-25 day grace period where no finance charges accrue does not apply when you don't pay in full each month.

Credit Card Secret: Find cards that exclude new purchases when calculating interest.

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Scam Tips

Credit card and checking account scams can cost you a bundle. Here are some quick tips that may help you prevent from being victimized from a scam:

If you are called or emailed by a company claiming to be a credit grantor, eBay, your ISP, or a utility (gas, electric, telephone), don't give them your Internet log on information, personal or financial information such as your credit card number, checking account number, social security number or drivers license number. Instead call the customer service phone number on your bill or go to the website directly to authorize a payment.

Check your credit card receipt to insure the correct amount at time of purchase.

If you are unfamiliar with a merchant keep your credit card within sight. An unscrupulous merchant could swipe your card twice or make an impression of the card in clay.

Before an online purchase, check any websites credibility with Google. Download the Google toolbar. Google Toolbar The toolbar shows a ranking that reflects the sites relevance to it's main subject. If a site isn't ranked or has a low rank it could mean the site is very new, or possibly has violated Google quality standards. For an in-depth look at any websites history checkout Alexa.

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Helpful Links / Contacts

• Better Business Bureau - www.bbb.org
• Federal Trade Commission - www.ftc.gov
• States Attorney General - www.naag.org
• Consumer information Federal Government - www.consumer.gov

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