ORLANDO, Fla. – 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?
Companies lower your monthly minimum
Years ago, minimums used to be around 5 percent, but companies found lowering this amount to 2 percent to 3 percent made them more money. That means if you pay less per month now you end up paying more interest in the long-run.
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.
Some cards offer a big bonus for signing up
Offers such as airline miles for opening an account are another way companies get you to spend more money. But there’s usually a catch, like having to spend a certain amount in a specific time period.
Watch out for balance transfer fees
These can run from 3 percent to 5 percent of the amount transferred.
Annual fees
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.
Closing accounts
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.