Get Financially Fit!

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This is a guest post form Linda Bustos.  Linda is an editor for CreditorWeb, where you can learn about credit cards, and compare credit card offers. 

Credit card companies have masterminds behind many of their promotions and special offers. Credit card marketers play are “banking” that you’ll make uninformed decisions thinking you’re saving money, getting special treatment or even helping the environment. These decisions can cost you money. Please read on!

0% Balance Transfers

If you have a low interest line of credit (perhaps 5% or so), wouldn’t it make sense to transfer your balance to a new credit card with 0% interest? It might, but make sure you factor in the costs of the balance transfer. The balance transfer fee could be as high as 4% of your balance, leaving just a 1% difference. And if you make new purchases, you will pay the
high interest rate, and any payments you make will be applied to your new purchases first.

You also must pay down the debt within the given introductory period. If it’s only 3 months or 6 months, you may find yourself paying 15% interest or more after the introductory period ends, when you could be paying 5% if you just kept your line of credit.

Gold / Platinum Cards

Gold and Platinum sounds prestigious - but these names often are just clever marketing to cover up high interest rates and annual fees.

Lower Minimum Monthly Payments

5% of your statement balance used to be the going minimum payment for most credit cards until many lenders lowered that rate to 2%. Not only does this take much longer to pay off when you only make minimum payments, but the geniuses behind this tactic understand that people will spend more thinking they’re saving so much in minimum payments!

Skip-A-Payment

Some credit card companies send letters to their customers in January telling them they don’t have to make any payments this month (after all, Christmas probably left them penny-less!). The letter makes it sound like the credit card company is doing you a big favor just when you need it most. Similar letters come in the Spring explaining that you have been such a good customer and have earned a “vacation from your bills,” and then they encourage you to take a vacation - using your credit card, of course!

Don’t be fooled, the only one who benefits from skipped payments is your credit card company. Always pay the maximum you can afford each month.

Low Fixed Rate Cards

Why use a credit card with 18.99% interest when you can get one at 9.99%? If you carry high balances, low fixed rate cards usually save you money. But they often come with hidden costs like annual fees, shorter grace periods, higher late fees and even clauses in your terms and conditions that grant your credit card company permission to jack up your rate if you
are late on one payment.

Eco-Friendly Credit Cards

The worst plastic is the kind that claims to be environmentally friendly. It’s great to choose a rewards card that will donate your points towards environmental projects - every little bit helps. But often the 0.5% of your purchases that actually translate into rewards is so miniscule, if you really want to make a difference, donate some cash to a worthy cause
in lieu of a new CD or restaurant meal every once in a while.

About the guest author:

Linda Bustos is an editor for Creditor Web, a resource for information on
credit cards and credit card offers.

Linda does a great job writing about the risks of credit cards.  Here are additional articles by Linda. 
  Tricks The Banks Play To Make You Pay
  Stop Paying Late Fees
  Ten interest-saving tips your credit card company doesn’t want you to know