Credit card companies can be pretty slick. They may have fees all over the place that you don’t even realize or do things to get around existing laws. Be aware of bad credit credit cards, which are those that fall into the sneaky category and may operate underhandedly with tactics they don’t want you to know about.
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Other Kinds of Credit Card Fees You Could Face
Fees, fees and more fees may be part of your credit card agreement. Although you may know about potential late fees for missing a payment or paying late, there are many other fees that could be in your agreement, according to the Federal Reserve.
Charging a number of these fees is perfectly legal, so you need to really pay attention to your credit card agreement before you sign it. An application fee may be charged just for applying for a credit card, while an activation or setup fee may apply once your new account is opened.
Certain credit card companies may charge a fee for simply having the card, which they can often call a participation fee, annual fee or membership fee. Using your credit card to get a cash advance may incur a cash advance fee while transferring a balance from one credit card to another may come with a balance transfer fee. The latter can apply for specific balance transfer credit cards or any credit card in general and is sometimes calculated as a percentage of the total amount you are transferring.
If you go over your credit limit with your charges or request and receive an increased limit, you may face a fee for going over the limit and another fee for increasing your limit.
Two more sneaky credit card fees reported by Readers Digest include an inactivity fee and a service fee. An inactivity fee may kick in if you have not used that particular card in a certain amount of time, usually about one year. A service fee may be tacked on at regular intervals, such as a recurring monthly service fee that shows up on every monthly statement.
Check Your Credit Card APR
The annual percentage rate, or APR, can also be a bit sneaky, according to the Federal Reserve, with a single credit card having different APRs for different transactions. Purchasing an item or service usually falls under a purchase APR, which you may not have to pay if you pay off your bills every month. You may also find a different APR that apply to balance transfers and cash advances.
The best low interest credit cards retain a low interest throughout the life of the card, but you may also notice a card that appears to be a low interest credit card due to its introductory APR. An introductory rate may be used to lure you into an agreement, but pay attention to what the APR becomes after the time limit on the introductory APR expires.
One more APR is a penalty credit card APR that is the amount of interest charged for incurring a penalty from the credit card company. Penalties may come from paying your bill late or sending payment with a check that bounces.
Know if Your Rate is Fixed or Variable
Two more things to know about your APR before you sign an agreement is if it is a fixed rate or variable rate credit card APR. Keep these points in mind:
- If you have a fixed rate APR, the rate must stay the same until the agreement says it may be changed or, if no mention is made of it changing, for the entire life of your account.
- The variable rate APR is based on an index of the bank’s choice. Credit card companies may use the Treasury bill rate or prime rate to set your APR, or they can even create a variation. They may base your variable rate APR on the average of the prime rate over the past three months, for instance.
- Variable credit card interest rates can change dramatically throughout the life of an account, and they can also change as frequently as your credit card agreement outlines.
The best way to protect yourself from any of these sneaky practices is to really pay attention to the fine print. Use our FREE credit card finder to locate cards that deal fairly today!
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