The things for which credit card companies charge us can be legion, above and beyond balance transfer and interest, which would be sidestepped with some forethought. One approach is to know what to look for; then choose the credit company that seems to be on the level. The following short column should help you come out on top of the finance jungle
Of course, when possible, you should always try and handle your credit balance completely by the end of each month. Truly, if we succeed in doing that, the credit card becomes practically like a debit card really, but card-holders obtain the rewards that credit card companies so often give promptly-paying customers. However, let us not fool ourselves with this apparently “good deed” on their part: it is this very reality that many choose not to pay the outstanding balance in full every month that supports the credit machine (in fact,; almost $115 billion that they bank annually comes directly from this). Obviously, we understand and admit this as part of credit-card-life; indeed, there should be some cost to borrowing money, right?
Hidden - more often than not - in the tomes of credit-card lore, a practice that would widen most of our eyes were we aware of it. There are many credit-card companies that begin charging you interest not from the moment they actually buy the item you charged from the merchant, but from the moment YOU charged it, which can be several days' difference. This means that they are hitting you with an interest charge for no defensible reason, logically, because interest can't gather on the promise of a charge; only on the charge, itself. Right??.
It's instructive to note why this matters. Consider: someone can say this shouldn’t be a problem since you bought the merchandise on the date from which the credit companies start piling on the interest. Well this actually isn't very fair, because if the company hasn't even bought the merchandise yet, why should they start charging you interest on it!? In the highly automated computer systems of credit card companies, your account pretty much reflects the facts of their purchase immediately, for all intents and purposes. After all, if you were to annul the purchase in the interlude between when you charged it and they paid the store, your account would stay intact; so, it makes no sense for you to be charged interest on this "phantom" purchase. It's a good thing that only some credit companies do this; thus, it is best to find one that doesn’t, if you either intend or anticipate not being able to pay most of your credit-card bills by the end of the month.
With credit card companies, so much goes on behind closed doors; it can be hard to keep track of so many little things we should be mindful of with our daily responsibilities. Another thing to watch out for is change from the common 25-day interest-free time-span on purchases. As if to buttress the previous point that while credit companies often appear to bestow gifts to those who pay in full monthly - before the finance charges strike - this is mostly just for appearances, so that they can attract more customers; after all, they’re only in business because most card-holders carry over a balance every month; extensive research shows them this will happen. The companies' true designs are shown by an increasingly common practice of decreasing the interest-free time-span to 20 days (almost without warning!). And the shocker? The wait period is decreased to around 23 or 20 days only for the credit-card holders who pay their balances off by the end of the month. Could it be that the credit companies are trying to catch you by surprise!? There is still an option, however; all you have to do is ask them to get you back on your previous billing cycle.
Christina Thomas is freelancer who dabbles in insurance and financial matters on the side, from endowments to credit card uses . She has learned that there are many ways to avoid the credit crunch, and use credit to actually build up a bank account, instead of the characteristic tearing-down the credit industry seems to revel in. She has had nearly a decade of insurance experience, especially in the U.K.