It is very tempting to get an offer for a new credit card with a low interest rate, but make sure to read the fine print on the application or you could find they are charging you fees that were hidden in the small print and that you are subject to rate increases that you weren't expecting. Whenever you are looking to apply for a new card make sure to keep an eye out for these few things, and it doesn't hurt to take a look over the small print on cards you already have to avoid unpleasant surprises in the future.
The Teaser Rate
The teaser rate has to be one of the largest causes of unexpected credit card expense. These are the promotions that you receive in your mail with the great big announcement of their low, low interest rates; it might even be 0%. Don't get fooled, those rates do not typically last more than several months; a generous promotion might give you that interest rate for a year at most.
Read the small print before you sign up for any of those cards with a low rate so that you know what the interest rate will be after the promotional period is over. Unfortunately, you are probably going to have to search through the full terms to find out what that rate will be, as most of these offers will not list it clearly.
Fees for Balance Transfers
Another tactic that the credit card companies will try to use from time to time is to offer the customer a low or no percentage rate on balance transfers. This can be a blessing if you happen to have a high balance stuck on a high APR credit card, but you still need to be wary. While this can be a very good thing some cards' balance transfers have a fee that can be as high a three percent, a time limited low rate, or possibly even a new even higher rate once a period of time passes.
Late Fees, Rate Increases and So On
It should go without saying that it is important that you make all of your monthly payments on time. Still, you should make sure that you are aware of the specific terms that are on your specific credit card. If you miss one single payment, it could potentially cost you $39 dollars or even more. Your interest rate may end up skyrocketing beyond your control if you are not careful as a result. It can also seriously damage your credit and can make it harder for you to get loans and credit in the future if you are not careful.
One of the hidden costs that you may not be aware of is increases in interest rates which happen across the board. Depending on lending markets and interest rates, you could end up with a standard interest rate increase with little if any warning. The one thing that you are going to want to attempt doing is calling up your credit card company to find out about a lower interest rate. If your payment history is solid, they may offer you a lower rate to reward you for being a good customer.
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Hi
Another trick is where there is a different rate for cash withdrawals and purchases. In this case the company will often use any payments you make to reduce the balance paying the lower interest first, leaving you paying more interest than you would expect.
Check another interesting article about 8 new types of fees invented by credit card issuers to trap their customers on Daily Finance:
http://www.dailyfinance.com/2009/12/10/credit-card-banks-have-eight-new-ways-to-hit-you-with-hidden-fee/
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