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6. "Paid in full? Not necessarily."
Banks generally calculate interest charges in one of two ways: based on average daily balance or on something called two-cycle billing. The latter, which more card issuers are now adopting, penalizes customers who carry a balance, even if it's only on occasion.
Here's how it works: Say you start your month with a zero balance and charge an amount that you don't pay off in full at the end of the month. If your card uses the average daily balance method to calculate interest, you are charged nothing for the month you made the purchase, and interest only for subsequent months in which payment is outstanding. With two-cycle billing, interest charges begin with the day you make the purchase.
Banks defend two-cycle billing as correcting the true interest charges for credit card purchases. Ron Brooks, senior vice president in charge of card services for National City Corp., says it's a way to make sure card users pay interest should they suddenly go from being "transactors" (those who pay off every month) to "revolvers" (those who carry a balance).
Relieved to find your card uses average daily balance? Don't be. Your card provider can switch to two-cycle billing with 15 days' notice.
7. "We're accepted anywhere on the globe, but our exchange rates are from Planet Ripoff."
In recent years plastic has all but replaced the traveler's check as the preferred method for making purchases abroad. Credit cards are widely accepted overseas, and they can be used in ATMs all over the world to dispense cash in the currency of whatever country you're visiting.
But beware of hidden charges. Some banks have recently raised the rates on currency conversion from 1 percent to 3 percent. On top of that, ATM usage has its own fees attached.
Consumers union recommends studying your cards' policies on foreign-currency purchases before you leave home, then adjusting your spending accordingly. Cards issued by smaller banks, for example, may have lower fees, as do certain brand-name cards. American Express, which has long positioned itself as a card for travelers, charges a flat 2 percent.
8. "We close early on payment-due dates."
Card statements are crystal clear about what day your payment is due, but are not so forthcoming about what time on that due date. Some banks have triggered consumer complaints by setting a 9 a.m. deadline on the posted payment date essentially, before the mail arrives.
Chi Chi Wu, an attorney with the National Consumer law Center, says that a number of class-action lawsuits have succeeded in getting most banks to push back their payment deadline to 2 p.m., the traditional banker's closing hour, a time by which most mail delivery is complete.
Even so, Tracey Mills, spokesperson for the american Bankers association, is unsympathetic: "The bill is due upon receipt. Banks have put a lot of money into giving consumers lots of options they can pay by phone, pay online, automatic bill pay. I just don't understand why late payment is still an issue for people. Pay your bill on time. It's easy."
She has a point if you can't allow plenty of time for U.S. mail delivery, you can always take advantage of an online or pay-by-phone option. and if you're really in a pinch, another alternative is to send your payment overnight, worth it if it means avoiding a $30 late penalty. But if you go that route, check the promised time of delivery the standard end-of-business arrival might not do the trick.
9. "Our whims are legally binding."
Here are more secrets other people in your life may be keeping from you, too.
You may think you've signed up for a card with terrific incentives, a low APR and just the right mix of perks and fees to suit you. But don't get too comfortable. Your card issuer can alter the terms of your once-perfect agreement at any time, as long as it provides you with advance written notice of as little as 15 days. "The biggest secret in the credit card industry is, they're very thinly regulated," says Wu, of the National Consumer Law Center.
Consumer groups report that this practice is a particular pet peeve with credit card holders, and for obvious reasons. But the ABA's Mills takes a stab at defending the practice. "A credit purchase is an unsecured loan. it's the riskiest sort of lending we do, which is why it's expensive. The banks have to protect themselves." She adds that since credit card lending is a highly competitive marketplace, unhappy customers are almost always able to seek alternatives.
How can you protect yourself from being blindsided? In short, vigilance. "Pay attention to all the mail you get from your credit card company," Wu urges, "even if it looks insignificant."
10. "Go ahead and exceed your credit limit we like that."
Contrary to popular belief, a purchase that puts you over your credit limit won't necessarily be declined. But you might wish it had been, since it could bump your interest rate into the stratosphere.
Lea Barker, a data-entry clerk in Oakland, Calif., found that out the hard way when she exceeded the limit on her Visa card and her interest rate skyrocketed to 29.9 percent. The sudden increase was among the factors that ultimately pushed her into credit counseling and a debt-management plan. "I have to find another $1,000 a month to dig my way out," Barker says. "I'm looking at a second job."
Adding insult to injury, banks often levy a so-called overlimit fee against maxed-out cardholders roughly a $30 penalty every month your balance remains above the credit limit. The ABA's Mills says that "consumers would rather deal with the fee than the embarrassment of being declined."
But consumer advocate travis Plunkett, of the Consumer Federation of America, is having none of it. Overlimit fees, he contends, are simply another way for banks to make money at the expense of the unwary. "If [banks are] willing to accept charges [over their cardholders' limits]," Plunkett says, "then they should accept the profit that comes from the increased interest charges" and leave it at that.
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