Tip #16

Use Credit Cards Wisely

Pay off your entire balance every month on time. This will help your credit score AND your pocket book.

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Credit Card Charges - How To Avoid Them

When we see a lender offering a credit card with a 0% interest rate on balance transfers and lots of other tempting money saving offers, it's easy to be swayed by them and to not check the fine print - but that's where you'll find information about the charges you may incur without even knowing it.

There are dozens of fine print clauses and charges that credit card providers use to get a few dollars extra out of you each month, so here are a few that you should watch out for:

  • The card issuer might offer you a 'grace period' which you might assume means that any purchases you make with your new card during that period is interest free. Often, this is not the case because what the card issuer may not tell you is that purchases made during the grace period are only free of interest if you pay the whole outstanding balance on your card at the end of the month.
  • Many card issuers offer 0% interest on balance transfers which seems great - and could save you hundreds - but again, check what the interest rate will go up to when the 0% period is over. It could be a good deal more than the rate you were paying on your existing card balance, so in the long run, you're going to pay much more than you would've done if you hadn't transferred.
  • Over-limit fees will be applied to your account if you go over your agreed spending limit. This charge can be up to $39 and furthermore, if you don't reduce your balance so that it's back under the limit, that $39 will be charged to your card each and every month that you remain over your limit.
  • If you're late making your payment, you may be charged a fee. This varies from lender to lender so try to always ensure that your payment gets to them at least two days in advance of the due date. It's very hard to get these fees reimbursed if your payment arrives late, even if it wasn't your fault.

So make sure you read the fine print and don't allow yourself to be blinkered by what seems to be a great deal with no catches - there's always a catch! Remember the old saying - there's no such thing as a free lunch!

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