Some Credit Card Facts you should know

Have you gotten any credit card offers in the mail recently? Yes, it's probably a silly question. For many people, it's advanced to the point where it's unusual if they don't receive at least one "pre-approved" offer a day. And they're all very eager to let you know how much they think of you and how good their particular offer his. Some even go so far as to congratulate you for being selected to apply for their card – not "approved" for; apply for!

So, if you're considering taking any of them up on their offers, be very careful. As the saying goes, "if it looks too good to be true, it probably is." You can be sure that for every big, bold and colorful word in their brochure, there's a bit of fine print tucked away somewhere. Search for it, diligently! Here are some words of wisdom that the card companies would just as soon you weren't very wise to:

That low, low introductory interest rate might not even last as long as their offer says it will.

If you're not careful, that rate could jump long before your "six-month introductory period" is over. For instance, buried somewhere inconspicuously inside your disclosure document could be something to this effect: If payment is received late at any time during the Introductory Period, the interest rate will increase to 21.99%. So don't just pay on time, pay your bills a few days early if at all possible. Further, paying the full bill each month will avoid interest charges altogether (assuming your card has a grace period). And speaking of which…

All credit cards do not offer grace periods.

Yes, most cards do allow twenty-five to thirty days interest-free (that is, if you're not carrying an unpaid balance). But some have quietly sliced that time frame to twenty or even fifteen days. Others offer no grace period whatsoever, charging you interest on your purchases from Day One. Be mindful, also, that most credit cards don't give a grace period for cash advances or for new purchases when an unpaid balance is present from the previous month.

Applying for lots of different credit cards will lower your credit score.

The average American carries from three to five credit cards, and that should be more than enough for most people. If you already have three or four cards, you probably needn't bother even looking at any of those pre-approved offers you receive, much less actually applying for them.

The credit card companies certainly want you to pay on time, but it's in their best interest if you pay only the minimum amount required.

During the past several years, unbeknownst to most, many credit card issuers have quietly lowered their minimum monthly payment amount from four percent to two percent of the outstanding balance. Great, you say? Well, consider as an example, if you pay two percent of a $1,900 balance at eighteen percent interest, you'll be paying it for twenty-three years – and the total interest charged will come to over $4,000. Still happy? The moral of this story, then, is to pay as much as you can each month (preferably the entire balance).

But don't go anywhere yet, because this one isn't quite done. To take things even a step further…

Some companies, as a "courtesy," will allow you to skip the payment.

How sweet of them! They usually package this little ditty as a holiday "gift" to you, "because they know how tight money can be during that time of the year." But what they don't tell you (at least not very loudly) is that although you don't have to send them any money, they're still going to charge interest on the full amount of what you owe. So, go ahead and make the payment; because with friends like these…

You could be subject to more fees than meets the eye.

Everyone knows about late fees, the charges you get hit with if your payment doesn't arrive in time. But those aren't the only fees that you could face. For instance, there are over-limit fees if your unpaid balance goes above your prescribed credit limit, inactivity fees for not using your card for a certain period of time, and some companies even go so far as to charge a fee for not carrying a balance at all. And if you want to close your account, you might even be charged a fee for that.

Think twice about using a credit card company's Convenience Checks.

The only people that they're actually convenient for are the issuers – convenient for siphoning still more money out of your coffers. Be aware that the interest rate levied for using these checks may likely not be the same as that of your credit card, and you can bet it won't be lower. In addition, they often have transaction fees, generally two- to three percent of the amount that you write the check for. All this without a grace period; thus allowing the interest charges to begin accumulating immediately.

So, if your card issuer sends some of these checks to you, for your convenience, tear them up and toss them away. Furthermore, it might be wise to contact the company and tell them not to send any more. Mail can get lost or delivered to the wrong party, and the checks could end up in the wrong hands. How inconvenient.

Interest rates are negotiable.

It's very expensive to bring in new customers, so if you've shown yourself to be a valuable client, you actually have considerably more leverage than you may think. Call your card issuer and tell them that you'd like to have a lower interest rate and a waiver of the annual fee. If you do any other business with the issuer, don't hesitate to mention that, too. Let them know that you'll take your business elsewhere if they won't accommodate you. It costs them big money to replace you and they know that; you should, as well. There are many cards available with low rates and fees, and if you've built a good payment history you'll be able to get one.