Business Review

Credit card companies continue to make record profits even during a recession. Many companies profit on your misfortune or lack of credit knowledge. Card companies purposely create traps for you to fall into. Do you ever get a pamphlet in the mail offering you 0 percent APR? Or what about those that claim anyone can get credit? It is possible to outsmart credit card companies, however; you must be on top of it.

The most common trap is the 0 percent annual percentage rate (APR). Many companies only offer the 0% APR for balance transfers. This is when you transfer a balance to the new provider. If the 0% APR applies to purchases it almost always is for a short term with many restrictions. If you are late for or miss a payment, exceed available credit, or take out a cash advance expect the 0% APR to jump as high as 19%. If you are late or miss another payment you are talking about a 29% APR.

In general, watch out for late fees. They are added expenses beyond the interest you are charged. Card companies are hungry for your money. A late fee may be advertised as only $15, but that could be for balances under $100. Often times the fee depends on your balance. You could pay up to a $39 late fee. Companies are starting to charge 2.99% of your balance as a late fee, which means you could pay $149 on a $5,000 balance. Even if you send your payment early it can be considered late. Some less than kosher companies will delay processing until they can charge you a fee. Paying online takes care of this, as you have a date and confirmation number for your records.

Avoid taking out cash advances, you will end up paying a lot of money for taking out the green. Cash advances are usually 4% of the total advance. Interestingly enough when you pay your credit card bill the company will pay off your other items first, continuing to charge you interest on your cash advances. Avoid cash advances whenever possible unless it is an absolute emergency.

Did you know that credit card companies are also a club? Often times you are charged membership fees. These can be found on almost any credit card, whether you are a high roller or someone with less than perfect credit. The various fees include an annual membership, monthly maintenance or service fee, account setup fee, and a program fee. Before even getting your card you could owe as much as $200.

In order to ensure you do not become a victim of credit card companies ripping you off, be skeptical as to the types of cards you apply for. Read every word carefully and do not overlook the fine print. If it looks too good to be true it often is. Card companies like to think they are helping you, when in reality you are simply another customer. Individuals with poor credit almost always pay the price for it. Take out credit cards with banks you trust, and ideally have a relationship with.

Source: http://ezinearticles.com/?Top-5-Credit-Card-Traps-You-Need-to-Watch-For&id=4293551