Some Truth About Credit Cards

I could go on a 30 minute rant about credit cards and still not have all of my anger out. I spent 2 years working behind the scenes for them and have learned a few things, most of which sets off my anger. I would recommend anyone spend 6 months working for a credit card company in your life. The benefits to helping your debt and credit will outweigh the temporary misery of having that job. For those who cannot get the job yet, or simply don't want to, let me offer a few tips I learned in the industry.  Hopefully for many this isn't news, just a reminder of why we need to keep control of our credit cards and not let it control us. Keep in mind these rules aren't for every company, but generally this is how things work.

1.) The Credit Card Agreement- No none reads that fine print on the back of the credit card application (or online if you apply that method), so let me give you the jest of what it says: They reserve the right, without notice, to change your due date, raise your interest rate, increase your fees, or full out close your account at any time. By signing this contract you agree this is OK. Now, would they? Not often, it's bad business. But they can, and do occasionally. And there's nothing you can do for it- you signed the application.

2.) Monitor your Due Date online!- Did you ever get a statement in the mail (or online), then 2 weeks later get another one? That wasn't an error, that was a cycling due date. The credit card company can decide at whim to change your due date from having 30 days to 25 days at any time. Your notice is that statement they tell you. And if you fail to pay attention, late fees and raised interest rates will be your punishment. They HOPE for this. They will make more money off you. Don't let them get the better of you. Be smart and keep an eye on your due dates to make sure they don't change.

3.) DO NOT take a cash advance! EVER!- If your house has burnt down and you KNOW you will get a check the following day, I would STILL advise not using your credit card for a cash advance. They hit you in s. The first part is there is no grace period with cash advances. If you use your card for a month and have a bill of $50, pay that $50, then you get no interest charges. With cash advances, there is no grace period like with purchases. The moment you take out that cash advance it is accruing interest. It doesn't stop until the day the payment is received. The second part is how the payment is applied to your account. Credit card companies apply payments based upon the annual percentage rate (APR) from lowest to highest. So if you have a balance of $1,000 in purchases and take out a $50 cash advance, you will not be able to pay that $50 until your $1,000 in purchases is paid off completely. It sits and accrues daily interest while you try to pay the bill off, which is often harder to do with more to pay. Save yourself the headache, don't do it.

4.) Don't get caught by too good to be true balance transfer offers- They're complicated to figure out. How do you transfer with multiple balances? When do they expire? How much will your monthly payment have to be to truly take advantage of the rate? If you're familiar with the details and fine print, take advantage of it. Otherwise, just ignore them. You're better of going to a bank and taking out a private loan to consolidate your credit cards. I'm familiar with the fine print and I still ignore them.

5.) Don't get sucked in by the points- They tell you you can earn 5% cash back on cards. What does that REALLY mean? For ever $500 you spent, you get $25? In most cases, no. You earn 5% of POINTS, but it takes 25,000 points for you to get a $20 gift card. If you have the self control to use your credit cards for daily purchases, than turn immediately around and pay the charge on your credit card- this is a program for you! Don't quite have that self control? You're just going to raise your debt on your credit if you get yourself sucked into the "But I'm earning points" mentality. If you earn points, great! Just don't expect it to pay your bill for you or really add to much. Half the time mine expire before I can use them.