Credit Cards: Part 2 of 2 – Things to think about before getting a new credit card – Preventing trouble

This is part two of a two part series. Lets face it, credit cards have all sorts of new enticing promotions. Frequent flier miles, "cash back" promotions, school contributions, etc.

Adding to the difficulties is that it is difficult to shop for a card. Fees and high post-teaser rates are buried in the fine print and not well disclosed.

Here are some additional things to keep in mind when trying to compare credit cards:

– BIG ONE! – Trick cards – A creditor who acquired a prior credit card lender may offer you a new card – and then trick you by putting the old credit card lender’s debt on the new card, perhaps at rates less advantageous than you were previously paying.

– Look carefully at the interest rate, but recognize that the interest rate can EASILY change. Note that after the teaser rate expires, there will likely be a new rate. Find out what that new rate will be.

– Penalty rates – Credit card contracts, including those that advertise low rates, provide in the small print that our interest rate increases if you make a late payment or go over your credit limit. There are two distinctions here. If you are 60 or fewer days rate, the new penalty rate can only apply to future cash advances and purchases. If you are more than 60 days late, the new higher penalty rate can apply to existing balances of purchases/cash advances AND ALSO it can apply to any new purchases.

-Fees – Find out how much you will be charged for all sorts of fees. Here are a few ideas. Late fees, over-the-limit fes, annual fees, membership fes, cash advance fees, balance transfer fees, even fees for buying lottery tickets.

This post is largely thanks to the National Consumer Law Center’s "Guide to Surviving Debt" a 2010 publication available for a mere $20.00 from www.consumerlaw.org. Buy it – it is a fantastic book.

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