February 1, 2012

Do you know your credit card facts?

Credit Card fees are negotiable - True

You may be paying up to $120.00 a year or more as an annual fee per credit card depending on the credit grantor and the type of card you are carrying. You may also be subject to finance and interest charges of over 23% or higher. If you are a “good” customer, (in other words you pay your account on time each month) the creditor may be willing to drop the annual fee and reduce the interest rate. All you have to do is ask. If the creditor refuses look for a different card.

Credit card benefits are all the same - False

Many creditors will offer extra benefits if you “sign” with them. Benefits such as travel miles, travel discounts, insurance protection, lifetime warranties, and many more such “benefits”. Now some creditors have cut back or eliminated their so-called benefits without all the fanfare that launched them. So you may not be entitled to all those extras after all. Read the mail that comes from your creditors and switch cards if you are not happy with the changes. 

You are after all the customer!

Minimum monthly payments are all the same - False

Paying only 2% or 3% of your monthly balance may seem like a good deal. But I can assure you it is not. The creditor stands to make far more money from the interest charges the longer you carry a balance and of course they are happy to let you just make minimum payments. Some creditors have 5% as a minimum required monthly payment. Always pay more than you charge and try to pay off the account ASAP to avoid paying any interest.

Low introduction interest rate deals are a good deal – False

Low interest rates are a come on just to get you to sign up. Once the “introduction” period has expired your balance will be subject to the regular interest rates and if by chance you have not cancelled the old card that you transferred to the new one. You may have been charged twice and be even deeper in debt.

Interest Backdating - The store gets paid right away – False

If you do not pay the account in full each month, most credit card issuers, charge interest from the day the charge is posted to your account. But some charge interest from the date of purchase, which can be days before they pay the store for your purchase.

All credit cards have a grace period - False

Not all credit cards have a grace period. Think back when you received that great offer of a “gold” card with a $10,000 credit limit did you read the fine print? Some of these cards have no grace period. You pay interest from the date of purchase even if you pay on time.

Payment due dates are all the same - False

Most credit card issuers offer a 25-day grace period during which you pay for new purchases without incurring finance charges. However, some credit grantors have shortened the grace period to 20 days but only for customers that pay their balance in full each month.

Credit card companies can not take money out of my bank account without my knowledge - False

If your credit grantor is also your banker, and you do not make your payment on time or as agreed, the credit grantor has the right to “set off” which means if you have money on deposit with them and have not paid your debt as agreed, the credit grantor has the right to go into your bank account directly and take the money they are owed. This is not like a Garnishee where the creditor can only take a percentage of your money. In this case they can take all the money on deposit up to the balance owed to them.

Cards with the Visa and Mastercard symbol are the same as credit cards - False

Relatively new to the market, are cards that have the Visa and Mastercard symbol on the front but they are not credit cards. When used these cards deduct the money directly from your chequing account at your financial institution. They are debit cards not credit cards. So be careful when you apply for a card. Read the fine print.

Credit card Interest rates go up if you do not make your payments on time - True

Some credit grantors are raising the interest rate to those customers that are not paying their debts on time. Others have started charging late fees and penalties. These fees can be just another added burden to those that are already struggling with mountains of credit card debt.

Knowing your credit card facts before you use the card will make things much easier down the line if you get into financial difficulty.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!


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