Credit Card Advice

While credit cards can be a good thing, they can also be a financial nightmare.  If you're not aware of tempting offers and how they work to your disadvantage,  you might first need to seek some good credit card advice.

If you have a job and reasonably good credit, you're probably familiar with credit card offers that come in your mailbox on almost a daily basis, but beware, most credit card offers are riddled with pitfalls.

Advice on Credit Card Pitfalls to Avoid

Pre-approved credit card offers with low interest rates.
The interest rates on these cards are generally pretty low but they are usually only offered for a short time. When the special is over, you'll be paying a higher interest rate than the initial offering. Read the small print and be sure you know what the new interest rate will be.  You may start out with a 0% interest rate but it will most likely jump to 12% or more and if you've got a fair balance on your card at that time, it could mean quite a bit more money each month in interest.

Pay your bill on time.
Today, credit card companies penalize you with a late fee of $20 or more. Some are now increasing interest rates to 20 or 23% or in some cases even more. That's even if you are late with just a single payment.

Charge only the amount you can pay off in full each month. If you find that you're charging more than you can pay each month, then consider drawing up a budget to consciously keep track of your monthly expenses. See our money saving tips

Be cautious with promotions that offer no-payment or low-payment months.  Avoid these promotions as you'll only accrue more interest, and you won't make a dent in the overall balance.

Be careful of credit cards offering cash advances
Cash advances should be avoided if at all possible. Smart consumers know that cash advances are typically accompanied by fees and huge interest rates. Also cash advances offer no grace period on payback.

Fees for cash advances vary, but can be very costly. They are computed in two ways:

1. They can be calculated on a percentage basis, which typically ranges from 1% to 4%.
2. Other issuers charge "flat fees" which are not based on the amount of the advance and are always the same.

Credit Card Transfers
If you are considering a credit card transfer, check with both your old and new card to see if you are going to get hit with a fee for the transfer. It can be up to $50 or so. And once you transfer, make sure you pay your bill on time. Don't ever forget that the minute you become a customer, your credit card company is looking for any way they can to get your rate higher than zero percent, even if it's missing one payment.

Common sense credit card advice to help avoid additional charges:

• Review the small print in the credit card application. Understand the conditions of the agreement.

• Mark your calendar each month with the date the check must go in the mail and try to pay off the entire balance on time each month.

• If the monthly due date doesn't work with your pay cycle, negotiate a new payment schedule.

• Use Express mail should you forget to write your check.

• Pay your bill on time. Pay by phone or use automatic online, on-time payments. You can be penalized with late fees of $20 or more. Some are even increasing interest rates to 23% or more, and that's if you're late with even a single payment.

• If you have a good credit record, ask the credit card company to waive the late fee.

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