Avoiding Credit Card Traps

The next time you open your credit card statement, take a closer look at the small insert titled changes to your credit card agreement. You know the one Im speaking about. Its that small, folded paper written in legalese that you promise to read some other time (but of course that time never comes) or you just discard it with the other junk inserts.

First and foremost you must understand that using your credit card after youve received this notification results in your automatic agreement to the new terms in the notice. To prevent these new terms from affecting your account you must stop using that credit card immediately or by the date given in the notification statement.

The most common modifications to credit card agreements include new APRs (annual percentage rates), new fees and/or changes to existing fees, or a change to the grace period on your account. The grace period is the number of days during which any credit used for purchases may be repaid in full without incurring a finance charge.

Not knowing or not keeping track of the dollar amount limit on your card is another trap you should avoid. Credit card issuers will allow you to charge a small amount over the limit set on your account.

However, dont be surprised when you get hit with an over limit fee, usually around $35.00 or higher, on your next statement. Also, be prepared for your APR to be increased if you go over your credit limit.

Along with the higher rate, youll also pay a late fee of $29 on up. Be sure to use the companys preprinted envelope when sending your payment. These envelopes allow the pre-printed bar code to be scanned by the post office so that it can be delivered more efficiently.

If youve counted on those few extra days from the time you mail your check and the time the check clears your bank, beware! Many credit card issuers have switched from the traditional method of processing checks to a new electronic process. This new system shaves off a day or more from the traditional method it normally takes for your check to clear by electronically debiting your account.

If youre considering paying your credit card bills online, check to see if any additional fees will be charged for using this type of payment. I recently received an e-mail message from one of my credit card companies announcing how easy it would be to make my payments online.

Included in fine print at the bottom of the e-mail was this note - A fee of up to $14.95 may be charged for this service and will be deducted from your checking account. Hmmm, spend 37 cents on postage and mail my payment five days before the due date or pay now and get charged an additional $14.95 fee? Ill bet you can guess which choice I made.

Taking the time to carefully read and understand your credit card agreement now will help you save money by avoiding unnecessary fees or climbing interest rates later down the road.

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About The Author James H. Dimmitt. James is editor of To Your Credit a FREE weekly newsletter focusing on money management news and tips. You can subscribe to his newsletter and also get a FREE copy of your credit report when you visit: http://www.yourfreecreditreportnow.com jimdim815@aol.com