Even with the new credit card reform legislation in place there are still creases
that need to be ironed out. The Federal Deposit Insurance Corporation (FDIC) has identified that consumers could still be faced with higher costs despite all of the changes. Higher interest rates and the possible addition of new fees and penalties are still a very real possibility. To help save some money on your card use try these simple tips.
Cards Can Be Canceled
Before rates sky rocket beyond control, the consumer has the right to cancel a card. Card issuers must reveal the terms of the changes such as fee increases and interest rates 45 days in advance of the change. When this notice is issued, the card supplier must reaffirm the consumer’s right to cancel the card before the new charges take place.
The 45 day notice period was instituted to allow consumers to ‘shop around’ for a new card. If consumers don’t like the new terms, charges or fees that are proposed, they can opt out and cancel the card. They still are required to pay the outstanding balance and some card companies increase the minimum monthly payments accordingly.
Be Wary of No-Interest Offers
No-interest offers always sound like a good deal. Consumers purchase a big ticket item such as a big screen TV or sofa on the retailer’s card and get an in store 0% APR on their purchase for six months, a year or longer. As usual there is a catch. The catch is that the item has to be paid off entirely by the end of the promotional period. If the purchased item has not been paid off within the time allotted, the finance charges are typically charged back retroactively from the date that the item was bought. Usually the Annual Percentage Rate (APR) on the retailer’s card is higher than a regular bank card.
Balance Transfer Cards
Some savvy card holders use the zero interest ‘honeymoon’ period to consolidate debt and start paying down the balance. Balance transfer credit cards allow users to consolidate all of their credit card balances onto one card that carries no interest. Once the zero balance period is over, they then move on to another card. By swapping onto different cards users deftly reduce the amount paid in interest charges.
Just because there is no interest don’t think the company is not making any money. They make their money on transaction fees. Transfer fees of 2% to 5% of the balance are applied. So rather than have a monthly interest rate this card offers a one time transfer fee with a zero monthly rate for around a year. The Citi CashReturns card offers an APR of zero percent for 18 months as well as two percent cash back on purchases for the first month. Other cards such as the Discover More Card offers 0% for a year on balance transfers and nine months interest free on purchases.
With some investigation and a little ingenuity money can be saved with yearly fees and interest rates. Every little bit helps and by identifying the traps and highlighting the savings money can stay put in your bank account.
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