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The Most Common Credit Card Catches

5th February 2012

Credit cards have become very attractive with their offers. There are irresistible offers from reward points, low APR, and zero annual fees, to name a few. In applying for a regular consumer credit card, the applicant is given an application form to sign up. Accompanying the application form is vital information about the mechanics of the credit card, like its terms and conditions, fees, APR, how to redeem points, and universal default of payment clause. Many applicants just can't be bothered to go through the fine print to know every detail. Most often, there are credit card catches concealed somewhere in the fine print. Sometimes, the perks and limited offers are wrapped in catches, which can really be a trap.

Before considering applying for a credit card, pause for awhile and read the following common credit catches to avoid:

  • APR. The Annual Percentage Rate is the interest the issuing bank charges the cardholder for borrowing on the credit card. Some credit cards have high APRs while others may have a lower rate. Most credit cards have low APR for a limited time, which is usually for introduction. Once this phase has lapsed, the credit card company will resume to its regular APR.
  • Balance Transfer Fees. Although many credit cards have low or zero APR on balance transfers during the introductory period, the duration of introductory period may not be enough to clear out all outstanding balance from the previous credit card. For example, if a certain credit card offers 0% on balance transfers for six months, and to fully pay the balance transferred, it will take 18 months, the remaining balance (which in this case valid for 12 months) will have its regular APR applied.

    There are of course credit card companies that offer zero percent on balance transfers for longer periods up to 24 months before their regular APR will take effect.

Charges and Other Fees

Aside from the APR, many credit companies have additional charges imposed upon credit cardholders, which were not clearly explained to them before they applied, but are stated in the fine print. They are the following:

  • Late Payment Fees. Being late in payment is sometimes inevitable. However, regardless of the reason for paying late, the credit card company will add a late payment fee on top of the balance. Late payment fees can vary between card issuers.
  • Fees to Make Payments. This happens if cardholders make payments using certain method like making payment at another bank other than the card issuing bank. Also, if payments are to be expedited, extra charges may be applicable.
  • Grace Period. Most companies have a grace period of around 30 to 60 days to pay their bill without being charged interest. If the credit card does not have a grace period, the issuing bank will charge on the unpaid balance as soon as a purchase is made.

Credit cards are useful tools in helping consumers manage their finances. To avoid the snare of these credit card catches, it is wise to make sure you understand the terms and conditions, use the credit card carefully and make timely payments.