7 Errors That Your Credit Card Company Wants You to Make
7 Errors That Your Credit Card Company Wants You to Make
You are planning for vacation and so you started saving airline credit miles for that. Finally, you have accumulated enough miles and made flight reservation for the trip. But you were surprised to find out that your airline credit miles are no longer valid because they have expired. This mistake was even committed by no less than John Ulzheimer, the president of consumer education for SmartCredit.com.
The bank won’t give much attention to these mistakes.
Credit card issuers do not bother about this common mistake regarding expiration of credit miles. John Ulzheimer has learned his lesson. He suggested that consumers must read carefully the fine print of the rewards credit card they have selected to avoid the embarrassing situation. They should clearly understand the rules of redemption.
* Pay monthly minimum only. The consumers should pay more than the monthly minimum in order to reduce the interest paid on the credit balance.
* Delay your payment now and then. According to John Ulzheimer, the credit card companies want you to pay your account and they won’t mind if at times your payment is delayed. Don’t be misled by this. Under the Credit CARD Act of 2009 the companies cannot raise interest on your balance for payments that are delayed for 30 days. But if you have received a 45-day notice, they can raise the interest and charge you fee for late payment which ranges from $29 to$39. You can imagine how much these late fees of $29 to $39 could benefit the card companies.
* Don’t mind the mail. You are too preoccupied with so many things that you don’t mind your monthly credit card statement. Statement must be checked once you receive it so that you will immediately know if there are erroneous charges and to avoid paying late fee and higher interest due to 45 day notice.
* Balance transfer to rack up a new debt. Outstanding balance is transferred to a card that charges low or zero introductory interest thinking that through this move, you can save money. According to Cunningham, if you decide for balance transfer, the move should be to pay off debt and not to increase it. He further said that the balance should be paid before the end of the promotional period otherwise the move to transfer the balance would be useless. The balance transfer fee must also be accounted.
* Choose to go over your credit limit. They say that under the new law if you don’t go for buying over the limit, the transaction could be denied and can cause you embarrassment. But Ulzheimer said that if you go over your limit, it can cost you higher interest on your balances and pay an over-limit fee.
* Paying more fees than the rewards earned. It is not practical to sign up for an airline credit card if you do not travel, Cunningham said. You pay $129 annual fee and only earn reward points equivalent to $80 cash. Ulzheimer said that this is like self funding your own rewards program. Therefore it is wiser to get a card with no reward points and no annual fee is required. Ulheimer further said that if your payment in getting a card with a reward points is beyond the promotional interest period the interest due will eat up the earned points. Choose the rewards credit card game after clearly understanding the rules of the game.
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Filed under: bad credit • Credit • credit cards • Credit Score • interest rates • line of credit
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