Credit card secrets

There are many aspects of credit cards you may not even realize. The Division of Banks offers the top 12 issues and remedies to help fix these problems.

Interest backdating

Some card issuers charge interest from the date of purchase instead of the date the transaction is posted to your account.

REMEDY: Find another card issuer or always pay your bill in full by the due date.

Two-cycle billing

This issue arises only when you switch from paying in full to carrying a balance from month to month.

REMEDY: Switch issuers or always pay your balance in full.

The right to setoff

You may have signed an agreement when you opened the deposit account allowing the bank to take those funds if you become delinquent on your credit card.

REMEDY: Bank at separate institutions and/or avoid delinquencies.

Fees are negotiable

You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of over 18%.

REMEDY: The lender may be willing to drop the annual fee, and reduce the interest rate. Otherwise, you can switch issuers to a lower-priced card.

Interest rate hikes are retroactive

When your low "teaser" interest rate period expires, your existing balance can be subject to the higher interest rate.

REMEDY: Pay in full before the rate increase or close the account.

Shortened due dates

Most card issuers offer a 25 day grace period to pay for new purchases without finance charges. Some lenders have shortened the grace period to 20 days for customers who pay in full monthly.

REMEDY: Ask to go back to 25 days.

Eliminating grace periods

That offer you received in the mail may not be so great. The most common "string" attached is the card has no grace period. You are charged interest on everything from the day you buy it - even if you pay on time.

REMEDY: Throw the offer out that sounds too good to be true!

Disappearing benefits

Many lenders get you to sign up with extra benefits. Some lenders cut back on these extras without the fanfare that launched them.

REMEDY: Read all notices regarding changes to your account and switch cards if need be.

Double fees on cash advances

The transaction fee can be up to 2.5% of the amount taken on a cash advance. Beware of cards advertising "no finance charges." Transaction fees may still apply.

REMEDY: Limit cash advances.

Misleading monthly minimums

The lender makes more money from finance charges the longer you carry out payments.

REMEDY: Pay all you can monthly.

Interest from day one

The 20-25 day grace period with no finance charges does not apply when you don't pay in full each month.

REMEDY: Find cards excluding new purchases when calculating interest.

Fewer rights on debit cards

You do not have the right to "charge back" problem purchases to a debit card as you do with a credit card. Under federal law lost or stolen debit cards can have unlimited liability for losses if not reported within 60 days. This is different from the $50 maximum liability on credit cards. (Exception: the $50 limit applies to debit cards and credit cards in Massachusetts.)

REMEDY: Know your card. Is it a credit card or debit card? They can look alike.

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