Credit Card & Interest Free Offers: The Big Risks in the Teeny Tiny Print

There is a veritable waterfall of offers out there to encourage consumers to spend more money; the Cash for Appliances rebates, tax refunds and stimulus packages just to name a few. Then add in the CARD Act which is meant to eliminate some of the burn from using credit cards. It may seem like a "kinder, gentler" time to use credit cards and just say "charge it," but there's still a lot of fine print that stores and cards that offer credit are hoping you won't pay any attention to.

Before you take advantage of no interest deals from retailers or get lulled into thinking that credit cards are now your friends, check out these credit myths.

"If I Make Every Payment on Time, Credit Cards Won't Raise My Rate"

It's true that credit card companies can't raise your rate for no reason without 45 days notice and that now they can only raise your rate on future charges, not existing balances theirs is one catch. If you make a late payment elsewhere and your credit card company runs a credit check, they can still use this information to increase your interest rate.

So beware that any late payments can affect your credit and ultimately your interest rates even if you're making payments on that credit card on time. Ideally you should make all payments on time to avoid being penalized.

"No Interest for a Year Means I Don't Have to Make a Payment for a Year."

These offers from retailers are often made for big purchases whether jewelry of furniture or appliances. It's true that you don't have to make a payment for a year BUT in most cases if you don't pay off the entire balance during that time then not only will the interest rate be high, it will often also be retroactive. In the end, you will be not only paying interest but paying a lot of it.

Chi Chi Wu, a staff attorney at the National Consumer Law Center says, "Even if consumers understand the pitfalls, such a tactic relies on consumer optimism or failure to think of the worst." The worst of course being that an illness or job loss would prevent the purchaser from making payments on time.

These "deals" are really only deals if you can pay off the entire balance within the no interest period and that's the only way you will really avoid paying interest.

"My Credit Cards are Accepted Around the World. Who Needs Traveler's Checks?"

Sure you can shop the globe on line or jet set around the world and find many places that will accept most of your credit cards BUT beware of the currency conversion fees. For example, both Master Card and Visa charge 1% conversion fees but what's worse is that many banks, like Bank of America, charge additional 2% so you could be adding a 3% fee to every purchase while you travel.
Maybe the convenience is worth it to you but be advised and do the math to avoid surprising bites from budget.

Sure it's all there in the fine print but retailers and credit card companies spend a lot of time marketing just the messages that they want you to see. They're hoping you'll overlook the fine print and that you won't miss the extra money going down the drain either.