Okay, even a budget fashionista is tempted to break out the plastic when the holidays roll around, and we’re not judging . . . but if you’re thinking of putting some things on credit, make sure you’re aware of the pitfalls, which these days are even more numerous than ever before. Fortunately, you can get the scoop from Americans for Fairness in Lending, through this timely tip sheet.
A few tips to get you started:
Credit Card Caveats:
Avoid Seasonal Solicitations – Beware of those attractive low introductory rates you receive before the holidays. The fine print in credit card contracts is filled with traps to catch the unwary. An introductory 0% interest rate can quickly leap to over 20% with just one slightly late payment. If you are going to use a credit card, shop around for one with a long-term low interest rate (APR), and read on to find out what you’re in for.
Avoid Late Fees – Pay your bill several days in advance of the due date to avoid sneaky late fees. If your due date falls on a Sunday and your payment arrives on Monday – surprise – you’re late and your interest rate may jump to a much higher level!
The Gift That Keeps on Taking – Even if you find the perfect gift for Aunt Betty, it’s not so perfect if it takes you over your credit limit. You’ll get hit with an overlimit fee and a penalty interest rate that will keep you paying for many holiday seasons to come.
Costly Cash Advances – Cash Advances are a Grinch’s (and a credit card company’s) best friend. The interest rates on this borrowed money are much higher than on purchases. In addition, the credit card companies apply your monthly payments to cash advances LAST so that the interest owed just grows and grows.
If you need help with credit card debt, contact the Consumer Action Help Desk online.