Magazine article Black Enterprise

Three Credit Card Traps to Avoid: Be Smart about Accepting Offers

Magazine article Black Enterprise

Three Credit Card Traps to Avoid: Be Smart about Accepting Offers

Article excerpt

THE ROCKY ECONOMY HAS CONTRIBUTED TO THE $956 BILLION IN REVOLVING consumer debt that reared its ugly head in the first quarter of this year, up from $940.6 billion just last quarter. In this unstable environment, consumers may be more vulnerable to services credit card issuers offer under the guise of perks. "Credit card companies use special freebies to promote extra spending and sneaky terms ... but there's no such thing as a free promotion when it comes to credit cards," says Emily Davidson, financial expert with Credit.com, a credit information Website. Steer clear of these offers:

(1) FREE CHECKS Known as convenience checks, they're almost irresistible if you find yourself in a financial bind. But make sure you read the fine print. According to Bonnie Spain, CEO of the American Center for Credit Education in Rapid City, South Dakota, you'll likely get hit with a transaction fee to the tune of 4% or 5% of the check amount as well as interest rates of 1.99% to 7.99% or higher. Some are a cash advance and charge interest rates of 19.99% to 29.99%.

In addition, payments are usually first applied to the balance with the lower interest rate, typically the credit card balance. That means you'll rack up interest charges for as long as you use the card. "Blank convenience checks are basically a cash advance and come with extra fees, higher rates, and fewer consumer protections. There's never a good time to use them. They should go straight to the shredder," advises Davidson. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.