4 Tricks Credit Cards Play So You Pay More

Anyone who's been using credit cards for a period of time has likely noticed the creditor doesn't have the customer's best interests in mind. In fact, it's quite the opposite. Credit card companies look for sneaky ways to charge you more money, while you're stuck wondering what happened.

1. Universal Default

A universal default clause in your credit card agreement basically allow creditors to increase your interest rate for virtually any reason or no reason at all. Your rate might go up because you were late on another credit card payment, because you took on more debt, or any number of things the creditor thinks makes you risky. You can try asking for a lower interest rate, but the creditor may not oblige.

How to avoid the cost

Carry a credit card balance low enough for you to pay off at any time. That way, if your creditor decides to increase your rate, you can pay off the card before a finance charge hits.

2. Short Grace Period


A short grace period limits the amount of time you have to pay off new purchases and avoid a finance charge. The shorter your grace period, the less time you have to make your payment and the greater the chance the creditor can charge a finance charge on your balance.

How to avoid the cost

If your credit card has the option to access and pay your bill online, take advantage of it. Otherwise, be prepared to mail your payment as soon as you receive your billing statement.

3. Due Times


Some credit card companies put specific guidelines on on-time payments right down to the hour and minute. One minute late and you could be hit with a late fee, a higher interest rate, and a negative entry on your credit report. Not only that, your other creditors could also penalize you with an increased interest rate.

How to avoid the cost

Plan to send your payment a few days in advance of the due date. Use online bill pay to set up an automatic payment. Make the payment by phone, even if there’s an extra charge. If you have to snail mail your payment, don’t hesitate to mail it express it with priority mail or overnight service. Any extra charge you pay for express mail will be less than the late payment.

4. "Fixed" Interest Rates That Change


Your credit card agreement might specify a fixed interest rate, but that doesn't mean your rate won't change. It just means the creditor has to notify you before changing the rate. If your rate increases and you carry a balance from month to month, the amount you pay in finance charges will also increase.

How to avoid the cost

Pay your credit card balance in full each month to avoid paying a finance charge. Or, when your creditor notifies you of an interest rate increase, exercise your option to continue paying your balance under the current interest rate. The catch is you'll have to close the account, a move that could affect your credit score.

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