It’s no secret that we here at moneyanswerguy.com advocate the disposal of your credit cards and accounts in favor of a cash-only lifestyle.  But, the reality is that most of you are not there.  And so, rather than beat you up about it, we take a more pragmatic stance in some of our writings to help you.

Getting hit by credit card charges is not fun.  Recently a woman that I know despaired over her credit card bill because she thought that she had made her minimum payment on time.  And yet, she still had extra charges on her next statement.  Unfortunately, the answer to our question of “how do I keep from getting hit with credit card charges,” might be “you don’t.”

This is the kind of world we live in: Credit card companies have developed charges and fees that they use to make a profit regardless of your account balance.  While the debate rages over whether or not these fees are exorbitant and unnecessary, there is one thing that is true:  it pays to read the small type.  Before you sign up for a credit card, read the small type about how charges are computed and fees are assessed.  It may surprise you.

But, more importantly than that is the fact that some companies change their policies and rules in mid-stream, thereby catching you completely unaware.  This is what smacks of unethical to most people.  It’s like playing a game, and having the rules change during the game.  No one wants to be involved in that world.  Here are some things to watch out for:

Raising Interest Rates.  We all know that interest rates fluctuate with the economic climate.  But, many times, credit card companies raise your rates in spite of what the economy is doing.  And, even so, rate increases like this often are not limited to a one or two percentage point move.  It’s not uncommon to see increases of six to eight percentage points.  That’s money out of YOUR pocket and into theirs on your existing balances.

Changes in Due Dates.  This tactic is like someone moving a target while you try to hit it with an arrow.  Know what your due date is and even if there is a time that it must be submitted by.  And, do what you can to stick by it, because the bank can raise your rates if you are late on just one payment.

Hidden Charges and Penalties.  You will get hit with fees for things like cash advances, balance transfers, foreign currency exchanges, paying by phone, etc.  But the biggest fee of all might be triggered by going above your credit limit, which can cause rate increases to more than 30%!  Ouch!

Introduction Rate Headaches.  When you receive an offer that entices you to move your balance over from one card to another, look at the fine print first.  The credit card company keeps the rate on that balance low, while you accumulate higher interest rate amounts on new charges.  Then, when you make payments, they go to the lower rate balance in order to keep the higher interest rate charges building.  Talk about three steps forward and four back!

Forced arbitration.  You have limited legal rights when faced with a real dispute over balances and charges.  Recently, a family member of my own found that someone had stolen their card number and had used it to make purchases in a retail establishment clear across the country.  But, the credit card company, in their rush to make money, only made a small gesture at trying to resolve the issue.  Even now, it still is an outstanding claim.  Who knows if it will get resolved in the customer’s favor?

These are things to watch out for when attempting to use credit cards.  But, more importantly, are reasons to stay away from them all together.

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