ShopSmart: Credit card gotchas

ShopSmart magazine isn't just about filling your life with joie de shopper; it's also loaded with practical tips on everything from trans fats to the hidden chemicals lurking in your cosmetics. And, given that the average American has something like $9,000 in credit-card debt, the magazine has quite a few tips about dealing with those little plastic purse-snatchers. Here are some ideas on gotchas to avoid, from ShopSmart's Fall 2006 issue:

 

• Sneaky rate hikes: Hidden in the itty-bitty print of a credit card’s “Terms and Conditions” page, you’ll find warnings that your APR, or annual percentage rate, can change for any reason with as little as 15 days’ notice. So while you may be proud of your low “fixed” 8 percent rate now, don’t assume it’s going to stay that way. In just a coupla weeks your rate could double, triple, or even quadruple. To avoid this gotcha, read every one of those annoying mailings. If one includes a notice that says a hike is on the way, call and ask to keep your old rate. The better your credit, the more likely you’ll be successful. If you’re not, find another card. 
• Deadline creep: Grace periods — the number of days each month when you can pay off new purchases without accruing any interest — have shrunk like jeans in a dryer. Many are now down to 20 days. And more cards are using “double cycle” interest, which means you can avoid interest charges only if you’ve paid your last two bills in full. To keep interest charges to a minimum, pay off your balance in full each month. 
• Penalty shock: Late-payment fees have doubled to as much as $39 in the past 10 years. And instead of rejecting charges that push you over your credit limit, many issuers now let the charge go through and then hit you with a $30 penalty. To avoid these fees, keep close tabs on your balances and send in payments as soon as you get your bill or, if you pay bills online, schedule the payment to arrive at least three days before the due date.

— Marc Perton