Avoid Credit Card Traps

Credit card issuers are setting hidden traps that can cost you hefty fees and trigger sharp interest rate hikes:

· Universal default penalties--Some banks will jack up the interest rate on your credit card account if you’re late with payments on other accounts. Interest rates can run as high as 30%, according to industry analysts.

· Shorter grace periods and skyrocketing late fees--Credit card companies are shortening the interval for making “on-time” payments without incurring interest or late fees, and late fees at large issuers are as high as $39.

· Late payments and interest rate hikes--Some issuers raise your interest rate significantly if you miss a payment, and if you’re late two or three times, the rate may go up again.

· Over-the-limit fee triggers--An issuer typically charges an over-the-limit fee only if an account exceeds its limit at statement date. However, some issuers charge the fee if your balance has exceeded the limit at any time during the billing cycle.

· Hidden fees along with low introductory interest rates on balance transfers--Issuers may charge fees as high as $50 to cut the check that pays off your old balance. New purchases and cash advances may incur high interest rates, and your payments may be applied to the high-rate balances last.

The answer?

· Read the fine print on your credit card agreement so you understand your account’s terms and conditions.

· Pay promptly and stay within your credit limit.

· If your issuer raises your interest rate, call immediately to negotiate a lower one.

· Move your balance to a credit union account with competitive rates and no hidden fees or traps.

Ask one of our Member Account Specialist about the terms and conditions of credit cards offered at Saratoga's Community Federal Credit Union.


Copyright 2004 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.