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