Banish credit card debts

Do you harbor a love-hate relationship with yourliable 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 trackingchanging -- interest rates depending on whether
that accompanies paying with plastic. Don't forget theyou're making purchases, asking for a cash advance,
perks, like cash and airline miles, which could helpor 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 thanif 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 onpenalty rates may apply to your outstanding balance,
Capitol Hill, and lawmakers this week tried to shine aeven if you charged those purchases when your
bright light on some of the policies they don't like. Ainterest rate was much lower.
panel of senators called in executives from CitibankTeaser rates. Although the initial interest rate
(NYSE: C), Bank of America (NYSE: BAC), andcharged by a new card might sound great, it might
JPMorgan Chase (NYSE: JPM) to explain some of theirnot 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, hadbalance. 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 complaintscan 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 verycard 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 balancepurchases. Your higher-interest balance will hang out
every month, you have a short time before interestthere, accumulating finance charges, while you work
will be charged on your new purchases. Not so ifthrough 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 rackingexceed 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 orif you think a mailed check won't get there in time,
two-cycle billing to figure the balance subject toand 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 twothey'll be added to your monthly balance, and they
prior months' worth of charges to determine yourmay accumulate interest just like your outstanding
balance, whether or not you carried a balance thedebt.
month before.* Confusing disclosures. Try reading your card
* Trailing interest. This is interest that accrues whileagreement one day. You may not know what the
your check's in the mail. Mail a check to your creditagreement's talking about, but you'll definitely know
card to pay off a balance and, even if it gets to thewhat those senators were talking about.
credit card company by the due date, you'll still be