Wednesday, June 19, 2013

Do You Really Know Your Credit Cards Terms and Conditions

Many of us think that we know what we are getting into when we fill out a credit cared application, but do we really?  It's really scary to realize how many people are completely unaware of how their credit card account really works beyond the annual interest rate.  Do you know all of the situations in which you may be charged extra fees, interest, and penalties?  Not knowing can make owning a credit card a lot more expensive than you think!

I know that reading the fine print is a great way to fall asleep when you are having a bout of insomnia, but here are a few things that you should really comb through the fine print to find out:

What happens if I pay my bill late? In most cases, a late payment means not only having to pay interest on your balance, but also a penalty or late fee.

What happens if I exceed my credit limit?  Every card has a credit limit, or a maximum amount you can "borrow" but some cards will let you exceed the limit.  If it does, you are likely to be assessed a hefty fine.

Will I be charged if I transfer the balance of my card to another card?  Many people like to take advantage of balance transfer card offers which offer a 0% interest period in order to shift debt and save interest costs.  However, some cards may charge you a fee for transferring balances.

What will a cash advance cost me?  Most credit cards charge an additional fee for taking out cash from an ATM using your credit card, and these fees for "cash advances" can be large.

When does the introductory period end? Many people are enticed by offers of low or 0% interest.  Search the fine print of such offers to see when yours ends, and make a note of it on your calendar to avoid being caught off guard.

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