5 ways to minimize your credit card pain

5 ways to minimize your credit card pain

1. Understanding the consequences of “opting out” of rising rates.

By law, if you withdraw from the changing patterns and close the card, the card company may require you to pay the balance in five years, or they can double the minimum monthly payment. If you can not manage the consequences, be prepared to roll over the debt to another card – just pay attention to fees balance transfer. Also understand that if you close the card, it can affect your credit score because it reduces the overall amount of credit you have.

2. Know the four conditions that lead to higher interest rates on your existing balance.

They are fairly simple. The card company can increase the rate without notice if: a) Do you have a variable interest rate tied to an index and the index increase, b) you have opened the card with a teaser rate and expiry date (which would be said in your original agreement), c) you are in a training agreement and you have not made your payments as agreed, and d) you are over 60 days late with payment. (Latecomers can recover their previous level if they make minimum payments on time for six months.) You will not notice 45 days on any of these provisions.

3. Paying more than the minimum – especially if you have a card with balances at different rates.

Say you open a card that offers zero percent interest for six months, and continued to load the card after the teaser rate expired and rose to 14 percent. If you are just the minimum payment, the card company can claim this amount in Part zero percent of your balance – so that the party 14 percent continues to snowball. The law requires that any amount that you pay the minimum balance is applied to the annual percentage rate is higher.

4. Watch the new box that shows how long it will take to repay your debt if you only the minimum payment – it may shock you into action.

The Act requires that issuers MAP to view this information on paying your bill. In 2009, nearly one in three Americans said they had paid only the minimum on their credit card bill in the course of the 12 previous months, according to a report by the FINRA Investor Education Foundation. The figure was 41 percent for cardholders 18 years to 29 years.

“Many people think that the calculation is wrong. They do not realize it will take two decades to pay (the balance), off, if they only pay the minimum, “said Ulzheimer. “This box was a clear victory of the Act on the map.

5. If you push the limit, be ready for rejection.

The new card companies bill prohibits the assessment of a fee to more than your credit limit, unless you opt-in, if you do not, the card will be rejected by the seller. If you are someone who uses a personal card for business, opt-in can be helpful to the tax. “We did investigate it, and apparently the embarrassment at a price,” says Ulzheimer. About half of consumers “do not want the boy back to the table and say:” I’m sorry your card was declined. ”

Finally, read all the notices that come in the mail from your card company, even if it looks like junk. Girardo said Capital One has sent letters stamped self “notification of changes to your account.”

“We tried to be transparent with customers, she said.” It does no good to surprise people with it. “