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Stretching Your Creditability

Before you surf, here are excerpts from “12 Credit Card Secrets Banks Don’t Want You to Know,” by Edgar Dworsky of the Massachusetts Executive Office of Consumer Affairs & Business:

* Interest Backdating: If you don’t pay your card in full monthly, most card issuers charge interest from the day a charge is posted to your account. But some charge interest from the date of purchase. Find another issuer or always pay your bill in full by the due date.

* Two-Cycle Billing: Issuers that use this method of calculating interest charge two months’ worth of interest for the first month you failed to pay off your total balance. Switch issuers or always pay balance in full.

* Fees and Interest: You may be paying $50 or more as an annual fee on your credit card. You may also be subject to finance charges of more than 18%. If you are a good customer, the bank may be willing to drop the annual fee and reduce the interest rate if you ask. If not, switch issuers.

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* Interest Rate Hikes Are Retroactive: If you sign up for a card with a low teaser rate, when the low-rate period expires, your existing balance will probably be subject to the regular and substantially higher rate. Pay in full before the rate increases or close the account.

* Eliminating Grace Periods: That fabulous offer you received in the mail for a gold card with a $10,000 credit limit and tons of features may not be so great. The most common string attached is that the card has no grace period. You are charged interest on everything from the day you buy it, even if you pay on time. Throw the offer out.

* Disappearing Benefits: Many banks entice you with extra benefits such as lifetime warranties, a discount on travel or protection if a purchased item is lost. Now, some banks have cut back on these extras without the fanfare that launched them. Read the annual disclosure of charges and switch cards if need be.

* Double Fees on Cash Advances: Most credit cards impose both finance charges and a transaction fee on cash advances. Interest starts from the day of the advance and the transaction fee can be up to 2.5% of the amount taken. Beware of cards advertising no finance charges. Transaction fees may still appear. Limit cash advances.

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* Fewer Debit Card Rights: Some Visa / MasterCards have payments deducted from your checking account. Under federal law, you don’t have the same right to charge back problem purchases. Also, if the card is lost or stolen, you could have up to unlimited liability, not the $50 maximums of regular cards. Know your card. Is it a debit or credit card? They may look alike.

* Interest From Day One: When you carry a balance from month to month, there is no grace period on new purchases on most cards. The 20 to 25-day grace period when no finance charges accrue does not apply when you don’t pay in full each month. Find cards that exclude new purchases when calculating interest.


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