Credit Card Traps to Beware
Any kind of money lending has its darker corners. Specifically, it targets those who don’t know what they’re doing or don’t bother to read the fine print.
Additionally, these tactics can be marketed towards the most vulnerable people for credit card debt: college students. Given the demographic’s age and lack experience handling budgets – coupled with the fact some absolutely horrible credit cards get marketed on campus – it’s a good practice to know when a credit card is bad.
Keywords “As Low As”
Don’t be fooled by this phrasing. It’s similar to a sale at a department store saying everything is on sale “as high as 80% off!” In reality, maybe only a few things are 80% off – and the rest is closer to 10% or 20%.
The same applies for the annual percentage rate (APR). You’ll want to get a credit card with 15% APR or lower.
You’ve found a good APR – maybe even the best you can get. Before you hastily sign away on this new card, look to the monthly and annual fees. Unlike APR, which only applies when you use a credit card and don’t pay it off, annual and monthly fees will keep occurring until you cancel the account. If you get a poor rate in this category, you can be plagued with it for the long-term. You don’t want a monthly hassle off a rash decision!
Sign On Bonuses
Occasionally, you’ll find a credit card that has a sign-on bonus, usually in the form of their rewards points. Keep in mind the fine print on these bonuses, if they’re transferrable, what they can be used for, and it they ever go away.
Frequent flier cards can get especially tricky, so if you’re counting on those points, it’s imperative that you read the fine print before signing on.
Worst yet, you can get swept away by a good sign-on bonus and never notice the monthly fees.
Take your time when signing up for a credit card! Balance the risks and rewards of the different cards to best fit your spending needs. The biggest danger of credit cards is the fact that closing an account can have an effect on you credit score, so once you fall for a bad card, it may be just as terrible to leave it as it is to stick with it.