If you have just gotten a new card with a great rate, you might want to take another look. Although you might have secured 0% for the next 6 months, there are often a range of cleverly disguised fees and penalties to take into account. If you are unaware of them then these fees and penalties can really add up, and end up making your great deal cost you a lot of money. Here is some advice about how to identify and avoid these sneaky card charges.



Removal of benefits

One of the sneakiest charges is not really a charge at all, but rather a removal of the benefits that you have on your card. If you have a low APR or balance transfer rate, then you should not take these for granted. Although you might believe this deal is secured for the next 6 months as promised, this is subject to you meeting strict criteria. If you are even 1 day late with paying your bill, or go over your limit by the smallest amount, these offers can be taken away from you and replaced with a much higher APR. Although this is explained in the small print of the contract, many people overlook this and then feel the sting when their 0% credit card turns into a 20% one. Make sure that you know the conditions for keeping your deal, and then stick to them as best you can.

Balance transfer charges

Although some cards offer a 0% rate on balance transfers, that does not stop them charging you a handling fee for the transfer. Despite you not having to pay interest on the transferred balance for a period of time, it will cost you money to transfer the balance. If your balance is relatively low then you could be forking out a hefty percentage of the total amount. Make sure that you check the associated fees for balance transfers before proceeding.

Paying off the cheapest debts

Another procedure that can cost you money is the way that your card issuer pays off the balance you have. As you begin to pay off the balance, the card issuer can decide whether to pay off the higher rate part of the balance or the lower rate part. For example, if you have made a balance transfer of ?1000 to your card at 0%, and then have ?500 in new purchases at 17% interest, the bank is more than likely to pay off the 0% amount first so that they can make money in interest off the other amount. If you are going to get a new card, check out the way that the issuer pays off the balance, because if you can find one that pays the expensive part off first then you could save some money.

Penalty fees

Although your card might have low APR and a nice credit limit, if you don't stick to making your payments on time then you could end up paying huge amounts in penalty fees. For example, if you have a balance of ?990 on your card with a limit of ?1000 and you don't pay your bill on time, you could be hit with a ?25 charge. This charge will put you over your credit limit, and trigger another ?25 charge. Before you know it you could have paid ?100 in charges just for being a day late with payment. Although some credit card charges are disguised well, it is important to read the contract thoroughly and check all the charges before signing anything. If you do this then you will avoid most sneaky card charges and be able to take advantage of your low rates.