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Your Money > Credit Cards Articles > 10 credit card...
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By Sarah Modlock
1. Credit card chequesI make no apologies for saying that these have no place in our lives at all. You will pay all sorts of fees plus gobsmacking interest from the moment they are used. To add insult to serious financial injury they are sent unsolicited and so if lost in the post they are fraud risk. If you get them, rip them up or shred them and tell your card provider never to send them again. Grrr. 2. Cash withdrawalsOnly if you find yourself 100 miles from home with no clothes on and nothing but a credit card should you even begin to consider drawing money out on your credit card. That is the only way you can justify pay even higher interest rates than you would on purchases - up to 30% a year. In addition, you'll pay a cash-withdrawal fee of around 2% of the amount withdrawn, with a minimum charge of £2.50. Finally, cash withdrawals don't enjoy the usual interest-free period of between 45 and 59 days, so you pay extortionate interest rates from the withdrawal date onwards. 3. Minimum monthly repaymentsAround a decade ago minimum monthly repayments were closer to 10% than the 2% (or minimum of £5) they are more likely to be now. It may be great news for you that the lender is less demanding about the money you owe but tiny minimum repayments can put you - and keep you - in a lifetime of debt. As the years drift by your debt could grow to perhaps three times its original size because of the interest piling up. If you're struggling to pay off what you owe, transfer it to a 0% card or one with a low APR for life, stop using it and up the repayments to as much as you can afford. 4. Low-use feesYes really. Long before Egg decided to 'review' its card holders, Lloyds TSB slapped an annual fee of £35 on anyone who was not using their card enough (to make them a profit). Annual fees used to be the norm until a new wave of card companies scrapped them. Now they are creeping back. If your card issuer introduces one it's time to move on. 5. Enormous APRSize matters when it comes to credit and there are more of cards out there than ever before with shamelessly high interest rates. APRs approaching of between 20 and 30% used to be preserve of store cards but now credit issuers are trying their luck. It could be the 'special invitation' that arrives unsolicited in the post just as you were thinking of a new card or the soaring variable rate of the card you had for ages and took out on a low APR. Shop around.
6. Shorter interest-free periodsThis 45 to 59 days before the interest is charged on the purchases you have made can be all-important if you like to pay your balance in full. Now some card issuers are cutting the time to as little as 15 days. This is just one of many areas where profits are being maximised. 7. Wandering statement datesSome card issuers set a statement date - say, the 5th of each month - and stick to it. Others may move theirs around a little every month and will even bring their statement dates back if the 'usual' date falls on a weekend. It would be just as easy to push it forward to the Monday but the earlier date allows them the chance to capture more spending - and potentially charge more interest. 8. Balance transfer fees Once the credit industry realised they needed to beat the 'rate tarts' the balance transfer fees started appearing. So you may pay 0% interest on the balance for six months but if you want a longer breathing space, or if you pick the wrong card, you will have to pay around 2% of the value of the balance as a fee to the new card issuer. More than half of 0% transfer cards charge something. If you must pay then make sure the fee is capped as not all are. Your transfer fee may even be charged as a 'retail purchase' and attract the relevant interest. 9. In-credit fees Unbelievable though it may seem, some card issuers will charge a fee if you happen to have a positive balance on your card. So although no one will use their credit card as a savings vehicle, there may be times when you get a refund on something after your bill has been paid, putting you in credit. MBNA started the ball rolling with a £10 fee so watch out.
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