MeKnows

How to Avoid Traps Regarding Credit Cards

If you are the owner of a credit card chances are you will be aware of the different ways credit card companies try to get you to spend more money than you really want to. If you are not mindful you may find yourself holding a large enough credit card debt. With this in mind it becomes necessary that you do everything you can to avoid those tricky credit card traps. Here are a few things you must watch out for to help yourself.

Interest free is not so free after all

There are many credit cards that will offer you close to two months interest free days after which you will need to pay. Should you not pay the full amount after the sixty-day period you are likely to be charged interest starting from the first day. There are also many that will charge you interest on transactions that were interest free before claiming that the interest free privilege you had has been forfeited.

You should avoid these kinds of cards at all cost. Should you want to borrow using a credit card then get a card that does not have an interest free period when purchases are made. Some credit card advisors suggest that you get yourself two cards. One that you will use for spending and that you are sure you will repay quickly and another card for those items where a slower repayment is desired.

Penalty for late payments

If you are late in making a payment even by a day most credit card will charge you interest going back to the first day and some add penalties on to that.

Try to avoid being late with your payment. You can use direct debit to make your payment which will make late payments a thing of the past.

Paying the minimum

This is what many credit card providers want you to do. They generally say that you can pay a minimum of two percent of what is owed for a particular month. What this means in reality is that you will continue to owe the credit card company and rack up a sizable amount interest for years to come.

Instead of paying the minimum allowed on your credit card what you should do is to pay much more than that. Whatever you can afford above the minimum is better.

Debt transfer

There are cards out there that will allow you to transfer your debt from a competitors card to their introductory no interest card. If your debt is a lot then you might believe this is a good deal. What happens however is that once you transfer you debt to the new card you will have a pay a fee of up o three percent of your debt upfront. Also new purchases your repayment will be first applied to the existing debt first. New purchase will attract interest until you pay off your no interest debt.