Important credit card facts you may not know

Do you know everything there is to know about your credit card? Are you aware of all the workarounds to get the most out of it? We’ve always been advised to read the whole contract and the fine print. But certain details are not even disclosed; these things are usually those that bend (but not break) the rules. Some rule-bending can work to your advantage, only if you ask for it. Interested? Read on…

1. If you’re not a full-balance payer, most card companies charge interest starting the day a transaction is posted to your account (meaning when they pay for your purchase). But there are those that start charging interest on the date of purchase, even before they pay for your purchase. Find out which system your card uses and if it’s the latter, find another issuer.

2. There are some issuers that use the two-cycle billing method, which leads them to charge two months worth of interest when you switch from paying in full to leaving a balance to carry over. This is not an issue if you stick to a single system in paying off your credit.

3. If you have both a credit card and a deposit account with one bank, you may have signed an agreement that lets them deduct funds from your deposit account if you neglect to make a card payment. The only way to avoid this is to read everything that you’re affixing your signature to.

4. Fees are negotiable if you ask for it. Annual fees and interest rates can be reduced (and maybe even waived, if you’re lucky). Cardholders with a good credit standing have the best bet of snagging these deals. So do those who are closing their account. Issuers usually offer fee reductions to retain your business.

5. Other things you can request for are credit limit increases, temporary credit adjustments (lower if you want to control your usage and higher if you’re traveling) and a change in card type and rewards program.

6. New card rates, like the ones as low as 4.9 percent, last for a designated amount of time (usually 12 or 24 months). If you have a balance after that period, it will be subjected to the regular high interest rate.

7. There is a 25-day grace period for new purchases not to incur charges. Some banks reduce this to 20 days. Some issuers even eliminate this altogether—thus, the “catch”—for new card offers with seemingly “unlimited” benefits.

8. Many of the promotional benefits have expiration dates as well, giving you something that you didn’t sign up for. You may have been enticed by free travel insurance, double rewards points, and waived annual fees. Find out when the promos will end because you may be paying for something you’re not aware of.

9. “No hidden charges” is a line that’s full of loopholes. Cash advances are subject to finance charges and transaction fees. The latter is under the category of hidden charges as it is not usually part of the disclosure.

10. A low monthly minimum is not beneficial—at least to you. The issuer makes tons of money from interest and other charges that you pay for. Pay as much as you can to lessen your interest charges. –Ed Biado, Manila Standard Today