By Debbie Dragon

It turns out, your credit card company may not always have your best interests in mind when signing you up for one of their cards. Check out some of the ways you can lessen your interest payments and avoid other unnecessary penalties that lurk in the fine print.

1. Shrinking or Non-Existent Grace Periods
It used to be you could make purchases on credit cards interest-free if they were repaid within the 30 day grace period. Many credit cards have shortened the grace period to 20 or 25 days, and some have even eliminated the grace period all together. Credit cards without a grace period start charging interest on purchases from the day you make the purchase.

If you intend to make purchases on your credit card and pay it off before the interest is charged, make sure you know how many days are in your card grace period so you aren’t surprised to learn you are using a card without a grace period!

2. Fixed Interest Rate Cards Can Be Increased
If you have a credit card with a fixed interest rate, it does not mean the card company cannot increase your interest rate. It just means you are offered the interest rate on all purchases until the company decides to change the rate! Even fixed rate credit cards can increase their rates, as long as they give cardholders 15 days’ notice of the rate change.

To avoid a surprise increase to your fixed rate credit card, always open and read the mail from your credit card company. Rate changes usually come in a thin, plain white envelope.
3. Two Possible Penalties on a Single Late Payment
In 2009, the Card Act was passed to help consumers better understand their credit card fees. The act put a limit on the amount credit card companies could charge for a late payment, but there are no concrete maximums for penalty rates. If you make a late payment, there are two types of penalties a credit card company can charge:

Late Payment Fee:  this is a one-time fee that can be as much as $35.
Penalty Rate: this is a change to your interest rate that may happen if you are 60 days late making a credit card payment. The penalty rate is the new interest rate charged on your existing credit card balance and on all new purchases.

The Card Act of 2009 requires that card companies review accounts and remove penalty rates after an individual makes payments on time for six consecutive months. For most credit cards the penalty APR is 29.99%.

4. Penalty Rates Can Extend to All of Your Credit Cards
What you may not realize is that making a late payment on one of your credit cards can also result in getting a penalty rate on your other credit cards -- even if you have been making the payments on time for all the other cards!

A simple mistake can end up costing you a lot of money in higher interest if you carry a balance on your credit cards. Be sure to log into your accounts regularly to see if you are suddenly being charged a higher interest rate.

5. Balance Transfer Checks Can Cost You More
If you receive checks in the mail from your credit card company, don’t start writing checks to pay your bills thinking you will consolidate everything onto the one account to save money and time. Many balance transfer checks are going to charge you a fee of three to five percent of the amount you make the check out for.

So even if the interest rate on your credit card is lower than the rate you’re paying on the other account, the fee will often negate any savings.

If you find yourself paying excessively high interest rates, it may help to negotiate a lower rate or take advantage of a balance transfer credit card offer to help you tackle your debt.

MyBankTracker is an independent resource that helps consumers make smarter banking and money decisions.

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