March 28th, 2009
Using your credit card abroad can prove a costly affair. If you don’t watch your card’s billing mindfully, you could be paying through the nose for charges and fees as a result of overseas use.
Dynamic Currency Conversion
Anytime a merchant asks you if you would like the charges to your credit card to be made “in your home currency,” they’re talking about a Dynamic Currency Conversion. Instead of letting the credit card companies handle the conversion, the merchant does it on their end.
While it might sound like a smart idea (since you can see your charges on the currency your account is going to billed in), this offer is really nothing more than a scam. The conversion rate the merchant uses on these types of purchases are so ridiculously skewed (read: higher than actual), you’re literally paying extra money for nothing. Always say an emphatic “NO” when you’re asked.
Foreign Transaction Fees
While some merchants will try to convince you that charging in your native currency will remove the Foreign Transaction Fees usually levied by credit card companies, they’re really guessing at best. Some credit card issuers won’t charge the fees, while others will continue to do so. It all depends on your credit cards’ terms, not the word of some merchant who stands to eke out a little more profit from the deal if you agree.
Legality
As much as we would like to declare these types of setup as fraudulent, they’re actually legal, as long as you agree once you’re asked. Always disagree to being charged with an automatic currency conversion - there’s absolutely zero benefits for you when you let them.
February 17th, 2009
These fees can turn your credit card life into a living hell. Avoid if you can!
Universal Default
Considered one of the seediest credit card tricks ever devised, the universal default clause is an entry in your terms and conditions that basically allow the company to raise your interest rates on credit cards when you are late paying other bills, such as your mortgage or car loan. The interest rates are deathly serious too, sometimes reaching up to 35% annually!
Lately though, more and more consumers are widening up to these and some companies (like Citibank) have already made statements about abandoning the practice. To avoid it, make sure to ask your issuer if the clause is included in your credit card’s terms. If it is, it may be time to shop for a new card.
Double Billing
When you carry balances on your card month to month and your credit card company practices double billing, chances are highly that you’re experiencing its effects every billing cycle. This happens when the bank calculates finance charges based on the full price of a purchase, regardless if you’ve already paid part of it during the past month. To make sure you don’t fall prey to cards that bill this way, always inquire with your issuer. If they don’t calculate interest based on a single cycle, best move on to a different credit card.
Late Fees
Late fees on credit cards represent an average of around $30 with penalty interest rates reaching up to 35 percent. The bad news is, you can get charged for late payments even if you tried to pay on time. For instance, a delay in your mail-in payments or not making bank cut-offs can sometimes be enough to get you flagged for late payments and all the serious fees that come with it.
The easiest way to avoid late fees is to automate your credit card payments online. If you know you’re going to be late, you can also call up the bank and ask if you can be spared from the late fees. Most will acquiesce especially if your account is in good standing with the issuer.
