ORLANDO, Fla. (Ivanhoe Newswire) — The average U.S. household has about $5,700 of credit card debt according to the U.S. Federal Reserve. But could your credit card company be tricking you into paying even more?
They’re easy to get and convenient but did you know credit card companies have strategies to get you to pay more?
First, they lower your monthly minimum. Years ago, minimums used to be around 5%, but companies found lowering this amount to 2%-3% made them more money. That means if you pay less per month now you end up paying more interest in the long-run! Trick number two: low interest rates that change. Be sure to read the fine print on your card because the interest rate you start with might not be what you’re getting a few months in. Another way they get you to spend more: some cards offer a big bonus for signing up, such as airline miles for opening an account. But there’s usually a catch, like having to spend a certain amount in a specific time period. Trick number four: watch out for balance transfer fees. These can run from 3%-5% of the amount transferred. And lastly, if you decide to close your account, make sure there are no purchases pending. Just one small remaining charge that you forgot about can lead to residual interest and a financial nightmare.
Another tip: check to see if your credit card company charges an annual fee before you sign up. Sometimes, the promotional offer will advertise no annual fees but that only applies for the first year.
Contributors to this news report include: Julie Marks, Producer; Katie Campbell, Assistant Producer; Roque Correa, Videographer and Editor.
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