5 Credit Cards and Free Goodies

By Remar Sutton - Attitude Advisor

How many “free” credit cards do you have right now? How many times has somebody on campus or in your mail tried to push a “free” credit card on you?

Sound too good to be true? Well, it is. But before you fall for the easy offers, consider all the following consumer traps lurking within the ant print of most credit cards pushed on students. After a little study of the following gimmicks, you might want to walk away from the next person (or mailing) offering another card.

The disappearing low introductory rate. Most cards offer a low introductory rate only for a limited amount of time. That introductory rate may apply only to the "balance transfers" they want you to make or it may apply also to new purchases. But at the end of the intro period, that interest rate will rise—and that higher rate will then be applied to outstanding balances. That long-term rate, which must be disclosed at the time of the offer, may be higher than your current card.

Annual fees and balance transfer fees raise the effective interest rate. Though they may offer a low introductory rate, many cards charge either an annual fee or a balance transfer fee or both that effectively raise the interest you are paying. If you pay a $35 annual fee and a 2.5% balance transfer fee on a transfer of $1,000, for example, you have just added 6% APR to whatever rate you agreed to pay.

Higher interest rates for cash advances and new purchases. Checking the small print of most credit card offers reveals that cash advances never receive the lower introductory rates. Instead the rate for cash advances on many cards is as much as 19.9% APR or higher. Ouch! Many cards also charge the higher interest on any new purchases (beyond the balance transfer or initial "convenience check") made even during the introductory period.

0% that isn't really zero...

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