Credit cards and obscure details in your billing statement, part 2

The usefulness of credit cards does not mean that you should give in to be taken to the cleaners by the fine print in your billing statement. If you fail to read your credit card bill carefully, you might be paying a fortune in extra fees. Credit cards are essential for conducting business in the current world of Internet commerce.

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Credit cards let you buy today and make payments later if you won't have the money until this summer. Credit cards let you shop at Amazon all you want from the comfort of your own home. Credit cards are extremely lucrative for the companies that issue them, and a large amount of the profit comes from the hidden penalties and fees that are mentioned in the statement, but seldom read by the people who receive them. Bank cards are terrific tools; you can purchase an item today even though you won't have the money until next Tuesday.
 

Here are some more items that unwitting consumers might discover in the fine print of their billing statements if they would only take the time to look them over.

• Zero percent rate - Account holders should read the statement about unusually low interest offers, due to the fact that just one late payment could increase your rate of interest considerably. Lenders will frequently promote a temporary rate of interest of zero percent. Be careful not to pay late when taking advantage of a low interest introductory promotion, since a late payment could trigger huge boosts in the interest rate. Teaser rates typically will apply for a stated period of time, such as six months.
• The Universal Default Clause - Your creditor will examine your credit report every now and again to see if you have sent a late payment to anyone. The reasons for the Universal Default Clause don't actually make sense, but on the other hand, the company doesn't need a reason to raise your interest rate, since they can increase it for any reason. The rationale provided for the Universal Default Clause is that paying anyone late makes you likely to pay others late. If you make a late payment on any debt, your creditor will use this as justification for raising your rate of interest. The UDC is a pretty new penalty or fee, and many lenders are making use of it.
• Minimum payments - In years past, the mandatory payment was often a mere two percent of the balance. The minimum payment of two percent in the past was a nice, low, reasonable sum, but by handing over such a small amount you could be paying your balance off forever, which is exactly what your issuing bank would like. Your best course of action to avoid being hurt by minimum payments and compounding interest is to try not to keep a balance. Right now, required payments average about 4%, but sending in more is better. Most companies have increased their minimum payment levels to those recommended by the Washington several years ago. Investigate your limit. Something you don't want is to transfer a big balance to one card from another credit card account, just to realize that you have exceeded a limit that is not as high as you thought. Going over your credit limit will invoke a fee and an increased interest rate, which could mean thirty percent or more indefinitely. Just as your creditor can increase your interest rate, they may also change your limit.

Read your statement carefully when it arrives each and every month. Your statement could have all sorts of costly things hiding in it that you do not even know about.