Most credit cards make their money three ways: from the interest you pay; from annual fees, if applicable; and from the discount they get from every merchant who charges them for the privilege of letting customers use their card. You would think this would be enough. Some credit card companies, however, are beginning to sneak in a little extra fee to those customers who don’t carry a balance from one month to the next—the responsible customers. G.E. Capital, for instance, charges $25 to any customers who don’t pay at least $25 in interest over the course of the year.
Because more and more people are defaulting on consumer loans (credit cards, home equity, and car loans), these companies are beginning to scramble to think of new ways to charge you.
Read all the tiny print every month, and watch for any undesirable changes in policy. When you spot one, switch cards.
Then there are the essential questions: What is the current interest rate? How long will this rate last? What does the interest rate go up to after the introductory period?
So many credit card companies are competing for your money that many very low introductory rates are on offer. Again, you need to scrutinize them carefully—sometimes the rates for balance transfers and cash advances are higher. And their introductory rate may jump by 10 percent or more after a few months. Obviously you want the card with the lowest introductory rate, and the longer the low rate lasts, the better. In any case, you don’t want a card whose normal rate is above 10 percent.