Credit – Watch for costly card tricks

.
Credit card companies try all sorts of legal tricks to get your money. Fight back each month by scouring your credit card statement for surprise like these:

* Check the due date for your next payment. Card-holders have been blindsided by late fees and other charges because they didn’t notice the changed – and earlier – date.

* Monitor the interest rate. Even a fixed-rate card can change its rate as long as you’re given notice.

* Watch out for low introductory interest rates that sky-rocket a few months later.

* A practice called universal default allows credit card companies to change terms without notice – leaving penalty rates and fees free to rise. Creditors can also monitor your credit report and raise your interest rate if they see late payments on your other accounts. If your account is subject to universal default, switching to another card may be worthwhile.

Also, monitor how your finance rates are calculated. Some methods can be costly. The adjusted balance method subtracts this month’s payments from your previous balance – only charging interest on what is carried over. If no extra twists sneak in, this can be cheap.

The average daily balance method may either exclude or include new purchases. If it excludes them, it will add up all your balances from each day of the billing cycle and divide that total by the number of days in the cycle. “Including new purchases” works the same way but raises your balance every time you use the card – costing you more.

The previous balance method charges the finance rate only on the balance you had at the start of the billing cycle.

Two-cycle average daily balance methods are the most expensive. Where other methods might use the balance from one month, two-cycle methods impose charges for balances from the last two billing cycles.



All the best,



Timben