Costly credit card tricks
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Do yourself a favor and read the fine print before you sign up for that Super-Duper UltraCard with the $65,000 credit limit and the 2.9% introductory APR. You might be surprised by what you find. And before you do, here’s my reader’s guide to that fine print — a list of the costly little devils often hidden among the details by credit-card companies.
1. Looking for Any Excuse
Believe it or not, most credit-card companies will review your credit score on a monthly basis, according to findings from the 2007 Credit Card Survey by Consumer Action (a nonprofit consumer-advocacy group). Why? Because a lower score is an opportunity to raise the interest rate on their card, perhaps by a dramatic amount. The idea here is that if you’re making late payments on other debts, you now pose a higher risk regarding all your debts.
So be sure to watch your credit report carefully and make all payments on time to avoid a domino effect on your other lines of credit.
2. Offering “Fixed” Rates That Aren’t Really Fixed
You might think that when someone offers you a fixed-rate card, the rate is indeed fixed. But you’d be wrong. A fixed-rate card simply means that the company needs to inform you in writing at least 15 days before changing its rate. So pay attention to the notices that come with your bill. And if you carry a balance, always be aware of the interest rate you’re paying. If it goes up, it may be time to shop for a better card.
3. Penalizing Customers Whose Payments Are Five Minutes Late
Have you looked carefully at your credit-card statements lately? These days, not only are payments due by a certain date — they’re often due by a certain time, like, say, 1:00 p.m.
And a late payment could really cost you. Not only will you be charged a late fee (which could be as high as $39), but you may also be charged a penalty APR, which is far more costly. Indeed, you could see your rate soar to 32.24%, and that new rate may be permanent, according to Consumer Action’s survey.
4. Encouraging Minuscule Minimum Payments
The key to paying down your credit-card debt is to make payments early and often. Any extra cash you can squeeze out of your budget needs to be applied toward this debt. That’s the only way to whittle down your principal.
Unfortunately, if you only make the minimum payment each month, it could take many years to pay off your debt, even if you don’t charge anything more to your card. While it used to be that you had to pay off at least 5% of your total balance each month that requirement has now dropped to an average of 1% of the principal balance (plus current interest and fees) with more than half of the cards surveyed by Consumer Action.
5. Offering Shorter Grace Periods
The grace period — or window of time before you begin accruing interest on new purchases — is also shrinking. While it used to be 30 days, it’s now shrunk, on average, to less than 21, according to CardWeb.com. Some cards don’t have any grace period at all. Of course, if you carry a balance, there are no grace periods, so it doesn’t really matter. But if you pay off your bill each month, looking for a card with a grace period of at least 25 days could save you from unnecessary interest payments.
6. Whacking You Abroad
Using your credit card in a foreign country used to be the best deal in town. That’s because, while Visa and MasterCard charged a 1% fee, it was still significantly less than what you’d have to pay if you exchanged currency at a bank or used travelers checks, and you usually got a better exchange rate to boot.
These days, using a credit card overseas is still a good deal — but it isn’t quite as sweet. The issuers have tacked on an additional fee — usually 1% to 3% — in addition to the Visa and MasterCard fee, according to Consumer Action’s survey. (You can also get hit with this fee when you make an online purchase from a company based in another country, according to Consumer Action.) So a purchase might be more expensive than you thought.
7. Baiting and Switching
Just because you’re preapproved for a card doesn’t necessarily mean that’s the one you’re going to get after you apply. Once your credit history is reviewed, you might be sent a card with less favorable terms. So be sure to review a new card carefully to make sure it has the terms you expected. If you decide you aren’t happy, you can simply not activate the card and close the account.
8. Finding a Better Card
So what should you do if you think your current credit card is costing you too much? Try to negotiate. Grab an offer that you recently received, and get on the phone with your current credit provider to see if they will meet or beat that offer. Tell them that if they don’t work with you, you’re going to switch cards. Of course, be prepared to see this threat through. Probably the best way to find a new card is to collect the offers you receive in the mail for about six weeks, and then apply for the best one. Alternatively, you can easily search online at Web sites like Bankrate.com for credit-card deals. Just keep in mind that if you don’t have perfect credit, you probably won’t be eligible for the best offers.
Courtesy of SmartMoney.com
5 tips to save money on Black Friday
1. Do your research
Sure, sales fliers arrive with Thanksgiving Day newspapers. But you can usually find the information online ahead of time, says Kim Danger, founder of Mommysavers.com and the family savings expert at Coupons.com.
Two Web destinations posting deals at particular stores are BlackFridayAds.com, which clearly lists the date and time of any update to the site, and the ShopLocal.com Black Friday Shopping Guide. Both sites offer e-mail alerts.
And don’t forget to comparison shop online. Danger advises looking up current pricing of items at sites such as Amazon.com and BestBuy.com.
“What seems like a good deal might not be, and may not be worth standing in line for,” she says.
2. Create a game plan
Your research should reveal which stores are worth a Black Friday visit. But driving from destination to destination is no way to spend the day.
“Locations with multiple stores are a good choice so you can avoid a lot of driving, parking and crowded roads,” says Eva Yusa, known on her ShopLocal.com blog as Eva the Shopping Diva.
Speaking of driving, the planning should also involve prepping the car.
“Make sure the trunk is cleaned out or back seats are removed from your van,” Danger says. “Top off your tank to avoid wasting time at the gas station.”
3. Shop early
Karen Hoxmeier, founder and owner of MyBargainBuddy.com, suggests that shoppers remember to “go early and get done early.”
“By 10 a.m., most of the best deals are gone, the lines are horrible and stores are a mess,” Hoxmeier says.
If you really want to get a jump on others, try shopping on Thanksgiving Day. Dealnews.com refers to it as Black Thursday, since many of those Friday “door busters” actually become available online up to 24 hours earlier.
If you do wait until Friday, Hoxmeier suggests scooping up limited-time door busters first and limiting your shopping to stores likely to yield the best rewards. Your time is valuable, she says.
She asks: “Is waiting in line for three hours worth the money you are saving?”
4. Bring a friend
Store lines are more manageable with a buddy nearby.
“Send one person to the checkout lanes while the other snatches up the bargains,” Danger says.
Hoxmeier refers to this strategy as “divide and conquer.” Just don’t forget the (fully charged) cell phones in case you lose each other or need to separate and meet up later.
Danger also advocates leaving the kids behind before you head out to hunt for bargains.
“Crowded aisles and unscrupulous shoppers can be a dangerous combination for small children,” she says.
5. Wait for cyber Monday
The explosion of online shopping has created a new big day for retailers — the first day back to work after the Thanksgiving weekend.
Apparently, plenty of employees are shopping rather than working that day. It’s one of the busiest days for online purchases, says Danger.
Many sites have sweetened the deal for cyber Monday shoppers. Dealnews.com founder and editor in chief Dan de Grandpre says he has observed “an ever-growing number of online promotions — free shipping, free gifts, rebates, markdowns — (that) make cyber Monday an online holiday shopper’s bonanza.”
By Melissa Ezarik from Bankrate.com
