| Do you harbor a love-hate relationship with your | | | | liable for the interest that accumulated since the time |
| credit card? | | | | your billing cycle ended. |
| There are lots of reasons to love a credit card, | | | | * Different interest rates. Expect different -- and |
| starting with the convenience and financial tracking | | | | changing -- interest rates depending on whether |
| that accompanies paying with plastic. Don't forget the | | | | you're making purchases, asking for a cash advance, |
| perks, like cash and airline miles, which could help | | | | or transferring a balance. |
| make your fantasies of a Hawaiian vacation a reality. | | | | * Penalty rates. Expect your interest rates to go up |
| But there are also plenty of reasons to feel less than | | | | if you pay late or exceed your credit balance, in |
| enamored with that little piece of plastic. | | | | addition to paying a late fee. Also, expect that these |
| Credit card practices have become a hot topic on | | | | penalty rates may apply to your outstanding balance, |
| Capitol Hill, and lawmakers this week tried to shine a | | | | even if you charged those purchases when your |
| bright light on some of the policies they don't like. A | | | | interest rate was much lower. |
| panel of senators called in executives from Citibank | | | | Teaser rates. Although the initial interest rate |
| (NYSE: C), Bank of America (NYSE: BAC), and | | | | charged by a new card might sound great, it might |
| JPMorgan Chase (NYSE: JPM) to explain some of their | | | | not last for long. Often, an introductory rate applies |
| practices. | | | | for only a short time, or only to a transferred |
| Two of those companies, Citibank and Chase, had | | | | balance. Make a monthly payment even a day or two |
| recently announced some consumer-friendly changes. | | | | late, and your teaser could go away faster than you |
| Nevertheless, the lawmakers had a raft of complaints | | | | can say "Charge it." |
| about the industry in general, which make for a good | | | | * Payment allocation. Send a check to your credit |
| reminder why carrying credit card debt can get very | | | | card company, and odds are that your low-interest |
| expensive, very fast: | | | | balance will get precedence over any higher-interest |
| * Disappearing grace periods. If you pay your balance | | | | purchases. Your higher-interest balance will hang out |
| every month, you have a short time before interest | | | | there, accumulating finance charges, while you work |
| will be charged on your new purchases. Not so if | | | | through the lower-interest balances. |
| you're carrying credit card debt month to month. In | | | | * Credit card fees. Expect to pay a fee if you |
| that case, new purchases almost always start racking | | | | exceed your credit limit, even if the credit card issuer |
| up interest costs immediately. | | | | approved the transaction. Also, expect to pay a fee |
| * Double billing. If your credit card uses double or | | | | if you think a mailed check won't get there in time, |
| two-cycle billing to figure the balance subject to | | | | and you want to pay by telephone instead |
| finance charges, be prepared to pay more. When | | | | * Fees added to your balance. As the fees pile on, |
| using double billing, the credit card will use the two | | | | they'll be added to your monthly balance, and they |
| prior months' worth of charges to determine your | | | | may accumulate interest just like your outstanding |
| balance, whether or not you carried a balance the | | | | debt. |
| month before. | | | | * Confusing disclosures. Try reading your card |
| * Trailing interest. This is interest that accrues while | | | | agreement one day. You may not know what the |
| your check's in the mail. Mail a check to your credit | | | | agreement's talking about, but you'll definitely know |
| card to pay off a balance and, even if it gets to the | | | | what those senators were talking about. |
| credit card company by the due date, you'll still be | | | | |