Credit card companies are ninja marketers.
They know exactly how to make it feel like they are lending you a helping hand while yanking the rug out from under you.
If you’re a credit card newbie, you’re probably going to get caught in one of these credit card traps.
These EXACT credit card mistakes are what have caused the massive credit card crisis.
In this post, I’m going over the 5 credit card traps that you’re most likely to be blindsided by.
The last tip is a trap that we ALL fall for, so make sure that you watch until the end.
Credit Cards w/ 0% Interest APR
Wow… Free money!
I’d be dumb NOT to use my card for all of my purchases at this point!
Most credit card companies provide users with a 0% introductory annual percentage rate.
They market this in a manner that leads us to believe that our balance on our credit cards for the entire first year will have zero interest.
But most of these 0% APR offers are for balance transfers ONLY.
“Say it ain’t so.”
Any regular usage of your credit card or cash advances will be charged at a higher interest rate.
What the Fine Print Says
For the introductory APR, the fine print on a credit card application usually states that if you have a SINGLE missed, or late, payment, then your APR jumps up to 15.99%.
If this happens a second time, it’ll jump up to the APR’s highest limit of 29.99%.
Obviously, these percentages vary with every company so make sure you read the fine print on your credit card application.
- Credit Card Late Fees
But wait, there’s more.
Not only will your annual percentage rate double because of a late fee on your credit card, but you have an opportunity to pay a late fee or penalty fee too!
What a blessing in disguise.
What the Fine Print Says
Late fee or penalty fee amounts depend on multiple factors. But, in general, your late fees on your credit card will come in at $15 – $40.
And this will be a charge that you receive every single time you make a late payment.
- Credit Cards with Fixed Rates
You’re probably thinking, “Man, I’ll just sign up for a fixed rate so that I never have to worry about the interest rates on my credit cards going up.”
Credit card companies can change the interest rate they charge you at any time.
The term, “Fixed Rate,” ONLY means that you have the right to be notified IF the lender changes the interest rates.
What the Fine Print Says
The credit card statement I found for this example says, “We reserve the right to unilaterally change the rates, fees, cost, and other terms at any reason.”
- Credit Card Annual Fees
No annual fees? It’s Christmas, y’all.
We’ve all seen credit card offers claiming “No annual fees.”
Maybe you even thought that this meant you got free reign of the card.
I mean, you’re paying interest already.
(Unless you pay it off erry month.)
But let’s be real here. The credit card issuers are going to charge you an annual fee if you DO NOT reach a certain level of spending.
These fees they charge you for not spending enough money can range from $35 – $50.
What the Fine Print Says
The annual fees for the first year will be waived per the promotion.
AFTER that, you’ll start to be charged annual fees to use the card.
And if you miss a payment your annual fees will be applied INSTANTLY.
- Credit Card Minimum Payments
Only paying the minimums is seriously a debt trap.
On a $1,000 balance with 15% APR, paying off that $1,000 will take you 4 years if you make the $30 minimum payments on it.
In this scenario, you will be paying over 30% in interest.
What the Fine Print Says
There’s no fine print on this one. Just make sure that you are working on paying off your credit cards each month.
You lose a significant amount of money from holding a credit card balance.
But that’s all I have for today guys.
