Credit card statements hide all manner of things that you would not like

Credit cards are great tools. You can buy something today when you won’t have the money until next Tuesday. You can make payments if you won’t have the money until this summer. And you can shop at Amazon all you like from the comfort of your own home. Credit cards are also extremely profitable for the companies that issue them, and a large amount of the profit comes from the hidden charges that are mentioned in the billing statement, but seldom read by the customers who receive them.

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

• Check your limit. Just as your issuer can change your interest rate, they can also change your limit. The last thing you want is to transfer a large balance over from another card, only to find out that you have exceeded a limit that is not as high as you thought. This will cost you a penalty and a higher interest rate. And “higher interest rate” could mean 30%. Forever.
• Payment minimums - Most companies have now raised their minimum payment amounts to those suggested by the Federal government in 2003. Prior to that, the minimum payment was typically just 2% of the balance. True, it’s a nice, low, affordable amount, but by paying so little you could be paying your balance off forever, which is just what your creditor would like. New minimums average about 4%, but paying more is better. If you can, just try not to keep a balance at all.
• Zero percent interest - Often, banks will offer an introductory interest rate of zero percent. The rate will apply for a stated period of time, such as six months. Read the billing statement about this one, because a single late payment could raise your interest rate considerably. They aren’t lending you money interest-free so that you can pay late, and doing so could have you paying the highest rates the company charges.
• The Universal Default Clause -This is a relatively new penalty, and more and more companies are adopting it. In short, your creditor will check your credit report every now and again to see if you have made a late payment to anyone. If you do, your creditor will use this as justification for raising your interest rate. The explanation offered is that paying anyone late makes you a risk to pay others late, too. It doesn’t really make sense, but then again, the company doesn’t need a reason to raise your rate. They can raise it for any reason at all.

Read your billing statement carefully when it arrives each month. It could have all sorts of expensive things hiding in it that you didn’t even know about.

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