12 Ways Your Credit Card Rips You Off!

The modern credit card comes with a dozen devious and costly tricks. Read this to avoid them!

You wouldn't believe how many ways credit-card companies take money off you. Even sensible card users can find themselves being stung. Here are 12 booby traps to watch out for:1. The £5 credit card trickSome credit cards now set the minimum monthly repayment at the monthly interest, plus £5. The upshot is that a debt of £2,000 will take over 33 years to clear, and with a typical APR of 15.9% you'll pay a horrendous £4,976 in interest along the way!So don't pay the minimum. Instead, set a payment of perhaps 4% a month, or £40 per £1,000 of debt, to clear it at a sensible rate.2. Negative payment hierarchy hoaxThe least expensive debt is paid off first, meaning that the more expensive ones continue to accrue more debt interest for longer.The best way to avoid this is to never use your credit card for more than one purpose, i.e, don't use it for both balance transfers and purchases.3. Balance-transfer conWatch out for lenders that class balance-transfer fees (typically 2-3%) as a purchase on 0% balance-transfer deals. This means the fee will not come under the 0% deal, but will instead be subject to interest at the purchase rate, which is usually about 15.9%.4. Too-good-to-be-true typical APRsOnly the most creditworthy applicants will ever get the lowest advertised interest rates. Although current rules state that two out of three borrowers must be offered the typical APR, this only applies to approved borrowers, not the number of people who apply.5. Congratulations! We've upped your credit limitThe greater your access to credit, the greater may be the temptation to spend. But you mustn't see your credit limit as a target!6. The insurance mazeInsurance comes in various guises, not just the high profile dodgy ones. Steer clear of rip-off payment protection insurance (PPI) and credit card repayment protection (CCRP). 7. Late-payment stingLate payers not only face penalty fees but banks can also rescind any 0% deals you may have signed up to, costing you a fortune in interest. So don't pay late! Set up a direct debit.8. Monthly interest-rates ruseDon't be fooled by monthly rates: a monthly rate of 1.5% might not sound high, but it compounds up to a whopping 19.6% APR.9. Annual-fee manoeuvreCredit card fees are making a comeback, with fees from £10 to £275, usually in exchange for extra benefits, e.g. travel insurance. But it's very rare that a credit card is worth the cost of these fees.If you like some of the extra features, you're probably better off buying them separately, so shop around.10. Cash-withdrawals wheezeA typical charge is 2.5% of the withdrawal amount and a minimum charge of £2.50. So, if you withdraw a tenner, you'll be charged £2.50, which is equivalent to a 25% charge. Withdrawals also attract interest at even higher than standard rates for purchases, with no interest-free period.Do not use your credit card for cash withdrawals!11. Credit-card cheques trapCheques sent to you by credit-card companies attract interest at the standard rate for cash withdrawals, plus a handling fee of up to £50. Also, like cash withdrawals, you don't get an interest-free period.So don't use credit-card cheques either!12. Gambling-fee fleeceCard firms are increasingly cracking down on punters who use their plastic to make online wagers. Previously, credit-card issuers treated these transactions as purchases, but you're likely to find that they're now treated as cash withdrawals.The odds are against you being a successful gambler as it is, without deducting these extra charges!> Compare credit cards through The Fool, but watch out for the above tricks.> The Very Best Balance Transfer Cards