Sep06

Credit Card Scams and Gimmicks to AvoidBeware of Too-Good-to-Be-True Offers

Credit Card Scams and Gimmicks to Avoid

With credit card issuers loosening their requirements for cardholders once again, consumers now have a number of choices available to them. At the same time, these issuers are offering a variety of gimmicky cards to attract people to their products. The problem is that many of these offers end up being scams, since with them you end up paying much more than you had envisioned. Before signing up for one of these special offers, make sure that you are aware of what it will cost you.

Low APR Cards

If you receive a credit card application in the mail, it will probably come with the promise of low interest rates in big, bold letters. What it will not tell you, however, is that these interest rates are reserved for those with excellent credit scores. If you have a less-than-excellent score, this offer will end up costing you just as much as a regular credit card.

There is also the chance that your interest rate could be adjusted, as the low APR rate advertised usually is not a fixed rate. Scams like this are dependent on people applying for cards without reading the application thoroughly beforehand.

Reward Programs

On the surface, credit card reward programs sound like a great idea, as they provide you with points or cash back just for using your card. Before signing up for one of these programs, however, make sure that you read the fine print to see how the program actually works.

In many situations, you will only receive cash back if you purchase certain items. In other situations, you might only receive reward points if you put a certain amount of money on your credit card each year, and the credit card issuer will place a cap on the number of reward points that you can earn. These situations can quickly turn into scams if you think that you are receiving cash back on every purchase, but are in fact not.

Balance Transfers

Some credit card issuers offer balance transfer rates that look like they will save you money. A balance transfer acts as a credit card consolidation, as it allows you to place all of your debt onto one card. The issuer will then provide you with a lower interest rate on this balance transfer, which could allow you to repay your debt quickly.

These offers can turn into scams if you do not read the fine print, as many of the card issuers charge you with a transfer fee. In addition, the lower interest rate only lasts for a finite period, so you must repay this money before the higher interest rate comes into play.

Take Your Time

If a credit card issuer offers something that sounds too good to be true, there is a good chance that it is a gimmick aimed at separating you from your money. Read the fine print on every credit card application before sending it in and always calculate how much these provisions could end up costing you. In many cases, you might be better off with a simple credit card, as with one you will not find yourself with changing interest rates or spending additional money chasing rewards.

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