Sneaky Credit Card Details Companies Hope You Don’t Notice

Credit cards can make our lives easier in many ways. They ensure that we can pay for items that we do not immediately have the cash for and they can help us build a credit history so that we can buy homes and cars in the future. Unfortunately, using the credit cards incorrectly can result in a host of financial problems that can take years to undo. Many credit card companies have several sneaky details embedded in the terms and conditions of the credit card designed to wring more money out of you at any given chance. Here are some of the sneaky credit card details that companies are hoping you don’t notice when you sign up for the credit card.

Multiple Penalties For A Late Payment

Circumstances can sometimes cause issues where you are forced to pay a bill after its due date. When it comes to credit cards, a late payment can result in multiple penalties that can cost you a significant amount of money. The first penalty is a late payment fee that is charged directly to the balance of the account as soon as the payment is missed. This fee typically ranges between $20 and $35 per occurrence. The second penalty is an increase in the interest rate of the credit card, often to as much as 29.99 percent APR. This increase can be devastating to someone who carries a balance on their credit card. The best course of action is to pay at least the minimum payment by the due date every month so you do not incur these additional costs.

Double-Cycle Billing Can Result In Double Interest Payments

Another sneaky detail hiding in the terms and conditions of your credit card agreement may allow the credit card company to charge you double the interest on your balance due to double-cycle billing. With double-cycle billing, the credit card company uses your average daily balance over two consecutive months to calculate the amount of interest you will be charged. If in one of those months you make a payment late, your card company can impose two months’ interest on the balance. Once again, it doesn’t pay to make a credit card payment late, so avoid paying late at all costs.

Minimum Payments Can Keep You Trapped In Debt For Decades

Many people spend more than they should on their credit cards because the minimum amount that they must pay each month is a small fraction of their balance. This can give you the illusion that you are paying less when actually you will be paying more over time in interest payments for the charges. By law, credit card companies are only obligated to collect 2 percent of the balance plus the amount of the fees charged that month in each minimum payment. Disclosure has become a little better now that the credit card companies are required to put on the credit card statement how long it would take to pay off the balance making only the minimum payments. In most cases with high debt levels, paying off the balance could take decades when only making the minimum payments.