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Don’t be fooled into thinking that banks provide credit to consumers for free. Most banks have fees that cardholders may pay depending on circumstance. Pay close attention to what you are being charged for the privilege of owning a card.
Interest Charges
Credit card interest rates can vary widely, depending on the
type of card and the credit rating of the cardholder. Always
know how much interest your credit card is charging. Annual
Percentage Rates (APR) vary from year to year, and your credit
card company will notify you if the percent changes, but the
notification is not always easy to understand or find.
Teaser Rates
These extremely low rates last for three to six months and
then rise. Because teaser rates don't last, you should not
consider them when making a decision in getting a card. Some
consumers change credit cards often enough to take advantage
of a string of teaser rates, transferring their balances each
time to pay lower interest on their credit card debt. This
strategy requires a great deal of time, and attention to detail.
It's easy to forget and incur added charges.
Late Charges
If the credit card company receives your payment after the
monthly deadline, you will be charged a late payment fee.
Some cards with low rates for on-time payments apply a very
high APR if you are late a certain number of times in any
specified time period. These rates sometimes exceed 20 percent.
You'll find the information in the small print of the credit
agreement. Read it, because it can make a big difference to
your budget.
Annual Fees
Some banks charge cardholders an annual fee—typically
between $15 and $50. The cards are normally for a special rewards program, like airline miles, free gas, or money rebates. Determine whether the annual fee is worth the potential benefit.
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