Common Credit Card Traps: It Pays to Know What They Are!

Credit cards have become an indispensable part of the financial portfolios of many consumers. When handled responsibly, credit cards actually provide users with remarkable benefits. To enjoy these benefits however, credit card holders must exercise vigilance when deciding the type of credit card to avail.

Common Credit Card Traps that Ensnare Naive Borrowers

Check and double check your credit card's grace periods.

The standard grace period for most credit cards is 30 days. However, some credit card companies shorten their grace period to 20 to 25 days. This is not good for the user considering that salaries and wages are normally paid on the 15th and the 30th of the month. It can be expected then that, unless the borrower is very good at budgeting, under normal circumstances, money is running low by this time of the month (day 20th to the 25th). To avoid being placed in this situation, read carefully the fine print on the credit card application and do not pursue with your application if the standard 30 day period is not in place.

Watch Out for Decreased Credit Limits .

When a borrower applies for a credit card, he knows that he should not exceed his credit limit. A lot of credit card holders adhere to this. However, there are always times when the limit is reached. This is where the trap happens. Sometimes, creditors lower their credit limit to the disadvantage of credit card holders. When the credit card holder's outstanding balance suddenly exceeds the limit as a direct result of the creditor's action, the former suffers the consequence. He will be charged with an overdraft fee, which can further increase the credit card holder's interest rate, and can result in a further reduction of spending limits. The only practical solution is for the card holder to pay off his balance each month and stay below the credit limit.

Zero introductory rates.

Zero introductory rates is almost always attractive to potential credit card holders. This is simply because it offers the borrower the capacity to expand his purchasing power without paying anything extra. While this can be a good deal for the consumer, what is often not disclosed about introductory rates is that they are subject to change if the card holder misses a payment, or exceeds his spending limit. To avoid being trapped into this, potential card holders or borrowers must pay close attention to such clauses. Prior to committing to a particular type of credit card, it will do well if the borrower makes sure of the terms and conditions of the credit cards. For those who are already using credit cards, check the "fine prints" and be sure that you will not violate any of the card's terms.

Look Closely Into Time restrictions on Due Dates.

A lot of borrowers think that as long as they are able to pay their provider by the date listed on the remittance stub, then they are okay. This is not al all true. Some companies place specific times by which payments are due, in addition to the printed due dates, such as by 12:00 P.M. on the 24th . This information is usually found in the fine print, and card holders who do not read it may be disappointed when they are charged a late fee in the following month, despite their payment having been posted to their account on the due date. To avoid this, it would be wise for borrowers to make their payments one or at least two days earlier than what is stipulated as due date. Check also if your provider has online payment options. This will make payments easy and convenient.

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