Credit card companies need to make money just like everyone else. If they couldn’t make money by extending credit, they wouldn’t be in business, and that would force us to pay cash for everything from coffee to vacations. There is obviously a place for credit cards in our society. However, some tricks that credit card companies use to make money can only by classified as sneaky.
This is the third in a four-part series on the hidden cost of credit cards.
Shortened grace period
In the past, vendors have allowed up to about a 25-day grace period on payments. A grace period is the time between the statement date and the due date. A lot of companies are now shortening that grace period—in the fine print. Where you used to have 25 days, maybe now you only have 14. For some people this is the difference between being able to pay on time and being forced to pay late, but worse than that, a lot of people are being caught unawares. They may simply not KNOW that their due date has been changed.
They then get slammed with late fees AND finance charges. This is a particularly sneaky trick of the credit card companies. If you’re even a day late, you may be charged a late fee in the $40-$50 range. And not only are you penalized with that fee, but you’ll probably also be charged interest on the balance that was late, even if you pay it off in full—plus, some companies charge you interest on every purchase until the end of the NEXT billing cycle! Sound like a ripoff? It is. Next time you get a bill, check to be sure that due date is what you think it is.