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5 Credit Cards and Free Goodies
By Remar Sutton - Attitude Advisor
(Page 2 of 3)
0% that isn't really zero. Some companies are now offering rates of 0% on balance transfers that last until the transferred balance is paid off. Sounds good, but there can be several catches. First, there's often a transfer fee of typically 3%. Next, to keep 0% on the balance transfer, you have to make a minimum of new purchases which are charged the regular, higher APR. Finally, make a payment late and 0% disappears, replaced by a much higher rate.
Quick trigger late fees. Most card companies no longer offer grace periods for payments. If the payment arrives even a day late, a late fee is charged. The average fee these days is $29-$30. Some companies are even time-stamping payments—the statement says the payment is due on a certain date; the fine print says it has to arrive by a specific time, usually noon or 1:00 PM on that day. If your payment arrives on the due date but in the 3:00 PM afternoon mail delivery, let's say, that's too bad—you'll be charged that $35 late fee. Late fees and other penalties now account for a sizable portion of credit card company profits.
Astronomical “penalty” APRs after a late payment. If you pay after the due date by even a day or two, some card companies then increase the interest rate on the account dramatically. Miss the due date once and your rate may skyrocket to 19.8%, for example; miss it twice with this same company and the rate goes to 25.9%. That increased rate is your new rate from that point on. In addition, the company adds fees such as $29 or $35 for each late payment.
Lower interest rate balances are paid off first. If the balance on the card was accumulated at different times—for example, a balance transfer at a 4% intro rate, new purchases at 15% and a cash advance at 19%—the card issuer applies your payment first to its fees and the lower interest balances. You continue to rack up interest on the higher rate balances.
The disappearing grace period...
Continued
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