Three Credit Card Tricks To Avoid!

Here are three little known credit card catches that could end up costing you more than you bargained for.

What do you look for when choosing a credit card? Do you have an expensive debt you wish to shift to a 0% deal? Or perhaps you're a savvy shopper looking to maximise your rewards with a cashback or reward card?

Whatever your needs, companies will fall over themselves to hook you in, with lengthy balance transfer deals and cashback rates of up to 5% designed to induce signing-on-dotted-line syndrome.

However, while companies are too quick to highlight the benefits of getting a credit card, they often fail to point out the consequences should you fail to keep up with payments.

Take, for example a trick pointed out by Fool reader meringash, whose one late payment to his MBNA credit card resulted in the 0% balance transfer offer being withdrawn for the rest of the promotional period - replaced by a rather expensive standard purchase rate.

MBNA is not the only provider to do this, and all credit card providers reserve the right to revoke any special offer if you break the agreement by exceeding your limit or failing to make the minimum payment.

This means that a simple mistake which, let's face it, any of us can make, could end up costing hundreds of pounds in interest.

One notable exception comes in the form of Capital One's selection of cards, which will not revoke your 0% deal if you miss a payment (although standard late fees apply).

Thankfully, Capital One also offers one of the best balance transfer deals at the moment, with its Platinum BT and Purchase MasterCard offering 0% on balance transfers until February 2010 -- that's nearly 16 months of interest free credit.

Alternatively, if you're planning to splash some cash as well as transfer a balance, it also offers 0% on balance transfers and purchases until November 2009 on its Platinum card.

When reward cards become unrewarding

If you think these penalties only apply to promotional balances and 0% deals, think again. Most reward and cashback credit cards fall into a similar trap, where no reward points are paid during any month when the minimum payment is not made, or when you exceed your credit limit.

In addition, if you fail to make multiple payments, some cards will not only take away any rewards you have accrued for that particular month, but won't pay you any of the rewards you've accrued up to that point.

When things don't quite add up

And finally, if you're somebody who regularly pays your balance off in full each month, here's a cautionary tale. Miscalculating the full payment on your credit card by even a few pennies could result in you being landed with some hefty interest charges.

This crafty practice was highlighted by fellow Fool writer Cliff D'Arcy, who told the story of how one reader's easy mistake of underpaying her bill by £5 ended up costing her £50 in interest charges.

This is because failing to clear the balance meant that she was hit with an interest bill for the entire balance, and not just the outstanding amount.

So what can you do if this happens to you?

If you've been unfortunate enough to fall into one of these traps which, let's face it many of us have at one point or another -- all is not lost.

The first thing you should do is phone your credit card provider to explain why you missed the payment and see if they can reinstate your 0% deal, or refund any interest and charges that have accrued as a result the missed payment.

As a spokesperson at Barclaycard informed me, although the terms and conditions are clear when you take out the deal, these are not necessarily `black and white' and each case is considered on an individual basis. After all, you have nothing to lose by contacting them.

However, on a wider scale, missed payments will have bad implications for your credit rating, and could affect your ability to get other forms of credit in the future. For this reason, it's important to make sure future payments are always made on time.

If you're not the most organised person in the world, set up a direct debit to automatically pay the minimum or balance in full each month, which will guarantee that you never miss a payment.

You could also sign up to your card's online service, which will ensure that your balances and recent activity are only a few clicks away.

At the end of the day, making the most of financial products is rather like playing a game. Fail to stick by the rules and you're likely to lose out.

However, I still think credit cards are a great way to save and make money, and you can see exactly how much you could save in this article. After all, play the game right, and credit cards can prove a useful tool to ensure you're always a winner.

More: 88% Of Us Don't Know This About Our Credit Cards /Easy Money Comes At A High Price!