Credit cards can be quiet tempting and they provide flexibility to your purchasing and freedom on availing certain services you cannot readily afford. However, you should still be cautious on using them, especially if you’re not still savvy since purchases automatically represent certain charges and interest rates. There are typical hidden charges that must be examined such as the following:
- Teaser fixed rates. Cards offering low or 0% interest rates are really tempting and are really designed to lure you. But these rates are not permanent and could only last for few months. After a certain period, you might be surprised of the charges that will be on your account.
- Unessential insurance. Insurance relative to your credit card charges up to $50 but this will definitely not be useful in case your card is stolen. As a matter of fact, in the United States alone, there are federal laws at present prohibiting the issuance of this insurance to borrowers.
- Interest rate and late fees. Missed payment will incur interest rates which eventually may yield to an increase rate, especially for credit companies which raise them without even a warning. Because of this, hidden costs are produced which add up to credit balances.
- Late payment fees. There is a regular day and month for paying your credit cards, but there are companies not specifying their due dates and will just inform you right on that date or after. There are also those which are delayed on delivering bill statements. Late payments are charged from $25 to $50 thus it’s not really comforting at all.
- Balance transfer charges. Companies are claiming that they are giving a low or 0% interest rate on balance transfer when in fact they are giving a fee of as much as 3% of the total amount of the balance you transmitted
- Fees for maxing out. There are companies which approve transactions even if your card is already over its limit. In the end, you will be charged with penalty for maxing out. Another common instance is a customer who applied for a balance transfer without knowing that it will be transferred to a low rate card which has already reached its credit limit. The result? An additional penalty equivalent to late payment.
- Fees for being inactive. Deciding to stop using your credit card might not be a good choice after all since some companies charge individuals who haven’t using their cards for 6 months or more. This is especially true for customers who do away with purchasing when on vacation abroad. Charges start with $15 so it will be safer to swipe your card on small purchase just to prevent additional charges.
- Closure charges. Closing your account will still bear you up to $50 fees especially if you are still under contract with the card issuer. This may seem harsh but it’s one of the blatant practice being done by most credit companies to avoid account closure and loss of credit card customer.
There are really some companies which have the tendency to hide charges and change their policies irregularly, thus an end result will be accumulated debts for a certain period of time. To counter these hidden charges, read the detailed breakdown of your credit card policy and ask questions right from the start.