I’m giving credit cards another kick. I had so much fun writing 5 Ways To Screw Your Credit Card Company that I’ve decided to give those pesky plastic cards a second boot. So if you’re ready to kick up a stink by declaring freedom from insane fees, high interest rates, and butt kicking balance payments then get your boots ready.
Besides, many of you got so passionate about your plastic in your emails to me that I figured we’d all get a charge out of kicking around this costly topic again.
Since I’d rather see you kick the habit than kick yourself in the butt (I wanted to write ass) in the New Year, here are 5 MORE Ways To Screw Your Credit Card Company — and again, they’re all legal!
1. Stop staying loyal to “Loyalty Programs”
Years ago I played like a “good dog” and stayed loyal to a credit card loyalty program that really bit. The program appealed to my romantic dreams of flying for free on “points” and seeing the world for a mere annual fee. The problem was, I never seemed to collect enough points to get my gold card off the ground and the annual fee alone could have paid for a plane ticket home! Ouch!
I wrote about this sneaky credit card tactic in my book, 397 Ways To Save Money — and I lived to tell the dog’s tale.
If you think the cost of a “free” reward ticket or loyalty bonus is costing you a small fortune in fees at a higher interest rate, then do yourself a favor by doing some simple math. If the fees paid for your card add up to more than the free reward, then find yourself another credit card with a more attainable rewards program. It makes NO sense to stay loyal to a credit card rewards program that just doesn’t fly. Besides, loyalty is for the dogs.
2. Take a pass on “Convenience Checks”
Oh those credit card companies LOVE to send us stuff in the mail. They offer us 0% balance transfers, extra credit cards, and even offer teaser rates. But when your issuer sends you a little envelope stuffed full of convenience checks then do take a pass.
What are convenience checks? Well, they look like standard checks, but what they actually do is charge against your credit account at even HIGHER rates than regular purchases, and interest is often calculated immediately! PLUS many of these little check gems add extra fees to the mix — so you’re really giving your credit card company a BONUS by signing one of these guys. If you want to keep more moolah for yourself, then don’t sign your name to any of these convenience checks.
3. Stop paying an Annual Fee
Don’t you love that time of year when your credit card company bills that pesky annual fee directly to your statement? Wheeee! If you’re paying an annual fee for the privilege of charging in plastic then maybe it’s time to switch your credit card.
Many “premium” gold and platinum credit cards charge big annual bucks — money that could otherwise be used to pay down debt or saved for something that brings you real value. Since there are several no annual fee credit cards on the market, consider making the switch to save some big cash. After all, you do have the power to stop paying that “annual fee” if you so desire.
4. Don’t ever “Skip a Payment”
It’s that time of year when even modest holiday spending can add to an existing credit card balance, and the credit issuers know we’re a little strapped in January when it’s time to pay the piper! So if your credit card company makes you the offer to “skip a payment” then run for the hills and just say, “NO!”
Skipping a payment may seem like a deal, but think again. Not paying your minimum balance could hit your credit score, increase your interest rate, and most certainly stretches your payments over a longer term thus increasing the amount of interest you pay! Yuck!
Need convincing? Try this simple Credit Card Calculator to see how long it will REALLY take to pay off your balance!
5. Be wary of “Low Introductory” rates
So you’re minding your own business when a letter lands in your mailbox advertising a super low introductory rate on a new credit card. Since you’re carrying a balance on your current credit card with a 19% interest rate, how could this gift from the credit card gods not be a win! Well think again!
Credit card companies love to offer low teaser interest rates on newly issued cards — it’s how they make money after all! If you tend to carry a balance, this kind of offer may save you money. But if you’re not careful, these enticing low “introductory rates” can come with some expensive surprises, for example:
Lose the interest-free period on new purchases by skipping a payment or not paying off the whole balance! Do this and you might pay the regular (or higher) rate!
Add to your balance and see your payments applied to the lower interest rate balance first! It’s true, most credit card companies apply your payments to balance transfers and cash advances before they apply them to new purchases.
So before applying for a “low teaser rate” offer from the credit card gods do look this gift horse in the mouth. Be sure you understand all terms and conditions and ask the credit card company what transactions the introductory rate applies to, when the introductory period ends, and how your payments will be applied to all balances.
Phew! I think I’ve kicked this can enough for today. If you’ve gotten a kick out of this post then feel free to comment. Many of you guys respond to the email updates — and that’s cool! But to get your voice heard don’t be shy, click to the blog and speak up!
Your Two Cents: Got MORE ways to screw your credit card company? Or maybe you’ve got a credit card tip to kick around?