What Your Credit Card Doesn't Say Can Hurt

Physician's Money Digest, February 2006, Volume 13, Issue 2

It's easy for some physicians to gettaken in by credit card offers thatarrive in the mail. And let's face it,lately there seems to be a never-endingstream of offers flooding mailboxes ofrespectable doctors. The opportunityto significantly lower your interest rateor amass frequent flyer miles for a tripto Hawaii or Cancun can be difficultto pass up. But before you sign on thedotted line and run to make those airlinereservations, make sure you readall of the fine print. There is a greatdeal of information that the credit cardcompanies don't want you to know.

The following is a list of pitfalls tolook out for when considering a newcredit card offer:

1) Beware of low interest rates.The 6-month, 0% interest introductoryperiod promised by a credit cardcompany is certainly appealing, especiallyif you have a big purchase inmind. Unfortunately, that introductoryperiod might not last the full 6 months.Often hidden in the fine print is anotice that if payment is received lateone time during the introductory period,the interest rate will go up, and thebump could be substantial. Be diligentand mark your calendar if you have to,but make certain you get those paymentsin on time.

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Street Journal

2) What grace period? Speaking ofbeing on time, an article in the points out that mostcredit card companies allow you 25days before charging you interest onany unpaid balances. Some companiesallow their credit card customers 30days, but others have cut back to only15 days, while still others offer nograce period. That means you're payinginterest on items purchased fromday one. Always select the credit cardthat offers the longest grace period.

3) Avoid the late fee snafu. Yourcredit card agreement, and even yourmonthly statement, may indicate thatpayment is due by the 15th of themonth. Remember, however, that thecompany must receive payment by thatdate. You should note that simply havingyour payment in the mail by thatdate isn't sufficient to avoid a late fee.In addition, your company may stipulatethat payment be received by 1 PMon the 15th of the month. Dependingon the timeliness of the company's mailservice, 2 PM may be an hour too late.

4) There's a fee for everything.Late fees aren't all you need to be concernedabout when you feel inclined tocharge a purchase. In fact, you don'thave to do anything at all to incur afee. Your credit card company couldcharge you an inactive fee if you don'tuse your card for a period of 6 months,or a fee for not carrying a balance.Some companies will charge you atransaction fee each time you use yourcard, depending on your balance. Agood rule of thumb is to make sureyour credit card company supplies awritten list of all the fees it charges.

5) Convenience checks are noconvenience. If you are a good customerwith your credit card company,you have probably received an envelopein the mail stuffed with severalblank checks. These conveniencechecks can be very tempting, but oftenthe interest rate attached to them isconsiderably higher than normal purchasesmade with your credit card.Most companies also charge a transactionfee of 2% to 3% of the amountyou write a check for, and the intereston a convenience check starts addingup as soon as you sign the check. Tosave yourself needless fees and aggravation,shred them as soon as theyarrive. Or better yet, tell your creditcard company to stop sending thechecks to you. If they end up in thewrong hands, you could be vulnerableto identify theft.

6) Make bigger payments. Thebeauty of credit cards is that you canmake a large purchase and then pay itoff in small chunks. This sounds nice,but those interest rates pile up ratherquickly. By paying regularly and payingmore than the recommended minimummonthly payment, you'll save a greatdeal of money in interest.

7) Watch for rising rates. Whatmost people don't realize is that activityunrelated to your credit card could affectthe interest rate your card providercharges. For example, if you were lateon an auto loan payment, your creditcard company could use that to justify arate increase. The company could alsoraise your rate for no reason. The creditcard agreement says they can do so simplyby giving you 15 days notice. If thathappens, it's time to cancel the old creditcard and get a new one.

8) Room for negotiation. Sometimes,credit card customers do have theupper hand. Your credit card companyhas spent a lot of money luring you andothers into its fold, and it doesn't wantto lose you as a customer. If your creditis in good standing, contact your creditcard company and tell them you want alower interest rate and possibly a waiverof the annual fee. You'd be surprisedhow quickly they respond when youthreaten to bolt.