Credit card companies are famous for the credit card traps they set for you that reel you in to applying for their credit card. Many are well-documented, however there are so many credit card traps that you might not have ever heard about.
Here are some ways to avoid them in order to get the best credit card for you:
Fees – Many credit card companies charge fees such as over the limit fees, late payment fees, convenience check fees, and balance transfer fees. They have risen almost 160% in the past 10 years and continue to rise. Read every fee before signing up for the credit cards before you fall prey to their expensive tactics.
Penalty Rates – If you have ever missed a payment then you know the penalty rates have risen sharply; they can be as much as 30% with certain banks so be aware of what you are going to be paying before missing any payments.
Intro Offers – This is where credit card companies really set the trap for you. They offer you 0% to 5% APR only telling you in tiny letters on the bottom that it will rise to as much as 25% within a few months. This is the most common credit card trap that most consumers are aware of but still fail to recognize until their credit card bills come in. Make sure you read all the fine print, especially before transferring other large balances to the new card.
Bait and Switch – This usually deals with a card that you need perfect or near perfect credit to obtain and applies mostly to benefit cards. These are cards that you get cash back, airline miles, or automobile cash that will go towards buying a new car. When you fill out the application, you are giving them permission to give you the ‘base’ card if for any reason you get declined on the benefits card. The base cards are usually higher interest rate credit cards with more fees.
Decreasing Minimum Payments – It might seem great at first, the longer you stay with a company the lower they make the minimum payments. What they are really doing is keeping you in debt longer and taking more
money for them. The lower the monthly payment, the more they make in finance charges
No Missed Payment Penalty Rate – This may seem very confusing, but a new credit card trap has emerged over the past few years that get people even when they least expect it. This can happen to a person who takes a 0% interest rate and then transfers their balance onto their new card. This is usually a fixed APR that brings people in. What you may not know is that there is a loophole that says a credit card company can actually raise your APR for reasons such as too high of a balance, increased debt, or if your credit score decreases, even by only 1 point. This is done even when paying all payments on time. Yes, even if you pay every payment on time you can still have your APR raised because of a loophole that allows them do raise it as they see fit, without letting you know.
Credit card traps are the norm among companies now. If you need to get a new credit card or want to take advantage of a great offer, then you need to do your research and read every piece of fine print on the application. Go to their website and research more. You will be very surprised at what you find.