Watch Out For Hidden Credit Card Fees
You have seen a lot of credit card promotions offering you with very attractive low interest rate which is quite tempting. Unless you have read through the fine print before you sign up the offers, you could be hit by hidden fees or unexpected interest rate increases after the promotion period. Hence, there are a few thing to look out when you apply a credit card and watch out for potential hidden fees.
1. Teaser Rates
One of the major costs that surprises the card holders come in the form of teaser rates. Most people are accepting the credit card offers due to the attractive low or zero interest rate and they did not read the fine print when signing the credit card agreement. It comes to their surprise when they found the good deal in the form of low or zero interest never last. Typically, you will only enjoy the teaser rate for a few month or up to a year, then the interest rate will go back to the standard rate.
So, before you accept the offer of any credit card, make sure you have read the fine print, and understand how long will be the teaser rate period and what the standard interest rate will be. Keep in mind that credit card businesses are very competitive and the credit card companies are trying their best to attract customers with very attractive low interest rate and keep the standard rate only printed in the agreement; so, you need to read through the full term to find out.
2. Late Charges and Rate Increases
It is very important to make your monthly credit card payment on time, else you will need to pay the late charges which may cost as much as $39 per miss or late payment. Other than the late charges, your current interest rate may skyrocket to over 30%, meaning that you need to pay more interest for the future credit card balances. Other than that, the late payment will hurt your credit score and make future credit harder to obtain and cost more.
3. Balance Transfer Fees
One of the services used by credit card companies to earn more money from their consumers is by offering balance transfer service with very low or 0% interest rate. If you are not paying your credit card in full each month, the balances do carry interest that will keep snowballing every month. It will be good to be able to transfer the balances to a card with low or zero interest rate so that you can save money. However, before you decide to do balance transfer, you need to watch out for potential hidden costs and other fees. Such fees may involve an upfront processing fee ( may cost up to 3% of the balance you transfer) and the interest rate after the offer period (the low or 0% rate will normally end in a few months), it may be higher than your current rate.
The bottom line is credit card promotions that offer you low or zero interest rate, normally come with terms and conditions. You should always understand the details including the potential hidden costs before you accept any of the offers.
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