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Beware of Some Current Trends in Credit Card Practices |
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by: Debbie Dragon
When the economy is tight, people start getting a little desperate about what their next move should be. While it is always important to have a plan, it is equally important to be careful of jumping on the bandwagon with every new idea that comes along. Some offers and ideas can be a great idea, but others will do little more than set you up for more problems down the road.
Wave and Go- You May Want to Wave Good-bye to This Trend
One trend in the credit card industry that is still on the rise is the ability to “wave and go.” While waving your card at a card reader may seem like a convenient way to use your card because it will get you out the door faster, there are hidden dangers to using this technology. It's much easier to spend money without realizing it. When you don’t need to take the time to scan your card before you leave the store posts, those small purchases can add up quickly and you may not notice how much money you're actually spending.
The “wave and go” technology works by placing a small computer chip with a tiny antenna that can respond to radio waves from the card reader right inside your credit card. These “wave and pay” cards are intended for quick purchases of $25 or less. There's no signature required and no PIN number necessary. . Quite often, you'll find “wave and pay” card readers at convenience stores, fast food restaurants, drugstores and movie theaters. While you certainly save time waiting in line and you’ll be using a hot new technology, it's very easy to spend more than you planned. Avoid this trend unless you're already very responsible with your credit.
Rewards are Great- If They Stick Around
Another credit card feature that many people are thrilled with is reward plans. Everyone loves to get something for nothing and the idea of earning bonus points, cash back or frequent flier miles for every dollar you spend can be too intriguing to pass up. However, be careful when using these plans as your criteria for choosing which credit card you affiliate with. In the current economy, you may just see these rewards disappear when you least expect it. For example, in the past, some companies have provided double points for everyday purchases on their charge cards. Over the past couple of years, double points have been eliminated by many companies, including American Express. Other major card providers have diminished their rewards plans on cards by rolling back their cash back amount from 5% to only 2%.
The problem is many people choose a credit card based on these potential rewards. You may forgo other helpful credit card benefits in order to get a better rewards plan. When that plan disappears, you're stuck with the card you chose without the benefit that was so important to you when you signed up. Rewards can be wonderful, but don't let them be the deciding factor in which credit card you choose to use
Free Balance Transfers Aren’t Always Free
One of the primary features some credit card companies will use to attract you to open an account are balance transfers- the option of transferring your balances from other cards with a higher interest rate to your new card, carrying a lower interest rate. While saving interest is very important, be sure to read the fine print and know what your balance transfer fee is. Some companies may charge as much as $300 or more for their balance transfer fee- those “no fee” transfer promotions generally have gone by the wayside. There may also be a limit on the amount you're able to transfer. With the tightening economy, great deals on balance transfers are becoming much more difficult to find
Overall it's important to remember that credit cards can play a significant part of your financial strategy. But when the economy gets tough, remember that credit card companies are not in the business of saving you money. They are in the business of making their own money. Read all the fine print carefully before you sign, and if you don't understand exactly what a feature is all about, ask questions and don't make a commitment until you know the answer.
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Credit Card Articles > Using Credit Cards > Beware of Some Current Trends in Credit Card Practices
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