How to sidestep the credit card traps
ARMING yourself with information is one of the bestways to avoid credit cardtraps.
Finance experts say credit card providers benefit from customers who are not fully aware of terms and conditions. Bank coffers are overflowing with interest, fees and charges from customers indifferent to the fine print.
The nation’s credit and charge card debt of $37.3 billion in October is set to soar following the Christmas and new year splurge.
TRAP 1: Ms Pentland says zero or low interest rate balance transfers, usually for six months, can be another trap. After the so-called “honeymoon” period expires, the card often reverts to a much higher rate of up to 20 per cent.
It is most important that cardholders find out what the interest rate is beyond the honeymoon period,” she says.
REPAYMENTS: Ms Pentland urges cardholders to repay more than the minimum.
She says the minimum amount will keep the bank off your back, but it is next to useless in reducing big card debt. It can take up to 20 years to clear a $10,000 card debt with minium repayments.
Other traps inclide Cash Advances and Balance Transfers as well as interest free days.
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Exactly, one of the keys to successfully managing your credit is to pay close attention to the fine print. You only have yourself to blame if you don’t, although that doesn’t prevent most people from blaming the “evil” credit card companies.