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The Dangers of Low Interest Credit Cards
Using a credit card can be a convenient way to pay for purchases without carrying around a lot of cash. Some people use several credit cards for a variety of purposes. Others stick with one. A number of consumers choose not to use credit cards at all. Regardless of your preference, when tempted to take advantage of a low interest credit card offer, you should be aware of the possible dangers.
Low interest credit cards typically come with some strings attached. The strings may be presented clearly to you – the applicant – or they may be discovered later as hidden risks. When applying for a low interest credit card, be sure to read the fine print and ask the lender plenty of questions to fully understand the rules of using the card.
For example, low interest credit may require an application fee of $50 or more. This is automatically charged to the account when the application is approved. If you aren’t aware of it, the charge may come as a surprise on the first monthly statement.
Another possible cost is maintenance fees. These may be assessed monthly or annually, and typically range from $3 to $15 monthly or $50 to $100 per year. Again, if you are not expecting these fees, they can show up at an inconvenient time in the billing cycle, forcing you to either pay interest on the fees or pay them in full, in addition to the regular required monthly payment.
A frequent complaint about low interest credit cards is the potential for the interest rate to suddenly increase when you make a late payment or after some specified period of time. The jump to a higher interest rate may be substantial, from a low 5% to 20% or higher. You may receive a monthly statement with a new higher interest rate and minimum monthly payment, which can lead to accumulating significant credit card debt. Furthermore, if you are not expecting this increase, it may negatively impact your monthly budget.
Beware of hidden charges and fine print rules. As hidden fees begin to accrue, you may find yourself at a loss of exactly what to do. It is likely that you have other financial obligations as well. Excess fees can make it difficult for you to pay all your other monthly bills. It can develop into a problem that is not easy to handle and a cycle of debt could begin.
Many people find themselves searching for help with their debts, but it is not always clear where to turn to. Debt consolidation is one method used by credit counseling services. Through this process, the service makes regular payments on behalf of the borrower in exchange for a single monthly fee. Certified counselors also have the knowledge and experience to work with credit card companies in order to negotiate lower rates on your behalf.
Choose CreditGUARD and look into our debt management program in order to get yourself back on track. Contact us today online or by telephone at 1-800-500-6489.