Credit cards - Watch out for the fine print in your statement, part 2

Credit cards let you shop at Amazon all you like from the comfort of your own home. Credit cards let you make a purchase today and make payments at a later date if you won't have the money until later. Charge cards are very lucrative for the companies that provide them, and a good amount of of the profit comes from the hidden charges that are mentioned in the billing statement, but infrequently seen by the people who receive them. Bank cards are superb financial tools; you can purchase something today even though you will not have the cash until next Thursday.

The usefulness of bank cards does not mean that you should submit to be taken to the cleaners by the terms of service in your statement. If you fail to read your credit card statement carefully, you could be paying a fortune in unnecessary charges. Credit cards are essential for conducting business in the modern world of Web commerce.

Here are some more things that unwitting customers might discover in the fine print of their billing statements if they would only bother to read them.

Payment minimums - The mandatory payment of 2% in the past was a nice, low, reasonable amount, but by forking over so little you would be repaying your outstanding balance off indefinitely, which is just what your issuing bank would like. Previously, the minimum payment was normally a mere 2% of the outstanding balance. Your best course of action to avoid being hurt by mandatory payments and compounding interest is to make an attempt not to maintain an outstanding balance. Currently, required payments are typically about 4%, but remitting more is better. Most companies have raised their minimum payment amounts to those suggested by the Congress several years ago.
 

The Universal Default Clause - The reason offered for the Default clause is that paying late makes you likely to pay other people late. If you make a late payment on any debt, your creditor will use this as justification for increasing your interest rate. The Universal Default Clause is a pretty new fee, and more and more lenders are adopting it. The explanations for the Default clause do not really make sense, but on the other hand, the company doesn't need a reason to raise your rate, since they are able to raise it for any reason at all. Your creditor will inspect your credit report every now and again to see if you have sent a late payment to anyone.

Zero percent rates - Be careful not to pay late when using a low interest introductory offer, as late payments could trigger dramatic increases in the interest rate. Consumers should read the billing statement about ultra-low interest offers, since only one late payment could raise your interest rate considerably. Temporary rates usually apply for a stated period of time, for example 6 months. Banks will sometimes offer an introductory rate of zero percent. Be aware of your limit. Just as your creditor can change your rate, they can also change your limit. Something you don't want is to move a large balance over from a different account, only to discover that you have exceeded a limit that is not as much as you thought. Exceeding your limit will cost you a fee and an increased interest rate, which could mean thirty percent or more forever.

Your billing statement might have all sorts of expensive things hiding in it that you do not even know about. Read your bill carefully when it comes each month.