What many credit card companies do is offer a great deal during a limited introductory period, and follow up with a policy change shortly after. What you don’t realize is that these policy changes come with loads of fees you would never have agreed to take on in the first place. Suddenly, you’re drowning in massive credit card debt that’s not only momentarily overwhelming, but is crippling to your credit history in the long run, as well. Don’t get tripped up by these common charges that credit card companies simply won’t tell you about.
Charge #1: Closure Fees
You want to drop a card? You’re going to be charged for that! If the company won’t agree to waive the charge, it might be better to just keep the card open and inactive.
Charge #2: Conversion & Foreign Transaction Fees
Some cards pride themselves on being excellent travel companions, boasting favorable flyer mile rewards programs, or even good cash back rates on purchases made in foreign currencies. What many of these credit cards won’t tell you about is the substantial conversion or foreign transaction fees they charge you while abroad. For every purchase you make while traveling, you’re likely being charged a sizeable fee.
Charge #3: Cash Advances
Many companies charge a hefty fee of 2%-4% of the withdrawal amount, adding a huge chunk to your debt without a word. Note: Repeatedly taking out cash advances on your card is also a bad move for your credit score. If you find yourself doing this often, consider taking out an unsecured loan from a third-party lender instead to help you settle your finances in a more reasonable manner.
Charge #4: Late Fees
This is probably the most damaging charge of them all. Cardholders can be dinged for late payments, and the rate will rise with every infraction. What’s more, credit card companies can automatically raise your APR (annual percentage rate) if you’ve been more than 60 days late on a payment.
Charge #5: Rising APR
What this seemingly innocuous fee does is give the credit card company the right to increase your APR without notice, dramatically ballooning your yearly payments. You likely won’t even realize the adjustment until you look at a statement. Many credit cards will stick APR into their terms in microprint, and they’re even more likely to try to fly this under the radar with policy changes (because who really reads those anyways?). ‘Read the Fine Print’ is a maxim that we should all take more seriously.
What to Do If You’ve Been Hit
Fallen victim to a sneaky, credit card bait and switch? It might be time for you to unload that bulky card with its hefty interest rates. In this case, consider the following two options:
Option #1: Transfer the remaining balance to a card with more reasonable terms. Just read the Terms & Conditions carefully this time (look out for steep balance transfer fees), so you’re not stuck in the same situation a few months from now!
Option #2: If the time is right, then consider taking out a personal loan. This can help you consolidate all your credit card debt into one monthly payment, which could have a considerably lower interest rate than your current credit card.