Due diligence on Credit Cards

tatos@irc.rizon.net said...

In the age, actually one have to actually watch out for 'Card Tricks', affectionately known at 'clauses that specifically' protect the Credit Card Companies' interests, in general.

No Joke - I mean No Joke. I have friends who incur a lot of debts just by little overdrafting and letting the mini-debt grow and grow.

This doesn't come at a surprise to anybody, but most money lenders do not have your best interests at heart. Some even send out 'misleading' marketing information as lure. Even the most reputable credit card issues bombard customers with 'benefits' that are specially designed to 'pad' fees and interest payments. Cash Advances and convenience checks don't come cheap, just read about the new Hybrid Cards in Singapore, and one can imagine a consequences of mis-using it, like overdrafting a 'debit card'.

There are some common 'ouchies' that could happen if you own a credit card.

1) Magical Appearing Annual Fee. You signed up for a card with no Annual fee. Then out of the sudden, you find one, some lenders start charging annual feel who pay their bills off every month - Its best to cancel the card AS SOON AS POSSIBLE.

2) Sliding Credit Line. Another inethical but not uncommon practice to entice a customer to use a cash advance check or skip-a-month payment offer and then lower their credit limit. The maxed-out customer is then charged an additional fee for being above it. Or just simply lower customer's credit limit once they reach it - It depends on how disciplined you are with your card, you might not have to worry as much as the other fellow if you are really concious about debt payments.

3) Mysterious Fees. You may not have to pay a charge to get a cash advance. But most banks charges hefty transaction fees, which can easily go around 2% of the total amount and no less than $10. Also watch out for calling the toll-free number to check your balance and penalty fees for ACCOUNT INACTIVITY. (Don't forget about the credit card buried at the bottom of your wallet!)

4) The Disappearing Grace Period. Watch out for lenders who pull the grace period out from under you. Remember, if your grace period is eliminated, you'll accrue interest from the day you make a purchase. And the only way to avoid this charge would be to pay your bill before you even receive it. This is the most horrible act I've heard, but it yet happened to Singapoeans, I think.

5) Credit Report Blunders - These do happen in real life. But with little diligence on your part, such inaccuracies can be looked into, updated and even removed from your account relatively quickly. If you are sure thats an Error (by keeping records of copies of your purchases, checks and past billing statements) and they still wouldn't bulge in helping you, try finding any authority to investigate your claim AS SOON AS POSSIBLE.

Not that Credit Cards are bad, its just require a little more due diligence prior getting a card and maintaining that card for your own conveniences and benefits, like actually assist in your budgeting by posting monthly statement print statements, etc. While also bolster your image in the eyes of another lender, especially if you consider using credit to establish a firm borrowing history, if you are going to apply for a large line of credit, like mortage or car loan, but overall it depends on one's disciplined to use it responsibly, and productively.

And remember, if you are going to cancel a card, it is best to contact though the Hotline AS SOON AS POSSIBLE and CLOSE THE ACCOUNT rather than going though other means (waiting for them to close the account for you), for this may help to reserve your Credit Score (if such a thing exist).