                             [Crashpad][Hood]



     12 CREDIT CARD SECRETS



     Banks Don't Want You to Know



     This pamphlet is a publication of the Executive Offices of Consumer

     Affairs. and contains a summary of your rights as a tenant. For

     further information:

     Massachusetts Executive Office of Consumer Affairs and Business

     Regulation 1 Ashburton Place Boston, Massachusetts 02108 (617)

     727-7780

       1. INTEREST BACKDATING



          Most card issuers charge interest from the day a charge is posted

          to your account if you don't pay in full monthly. But, some

          charge interest from the date of purchase, days before they have

          even paid the store on your behalf!



          REMEDY: Find another card issuer, or always pay your bill in full

          by the due date.



       2. TWO-CYCLE BILLING



          Issuers which use this method of calculating interest, charge two

          months worth of interest for the first month you failed to pay

          off your total balance in full. This issue arises only when you

          switch from paying in full to carrying a balance from month to

          month.



          REMEDY: Switch issuers or always pay your balance in full.



       3. THE RIGHT TO SETOFF



          If you have money on deposit at a bank, and also have your credit

          card there, you may have signed an agreement when you opened the

          deposit account which permits the bank to take those funds if you

          become delinquent on your credit card.



          REMEDY: Bank at separate institutions, or avoid delinquencies.



       4. FEES ARE NEGOTIABLE



          You may be paying up to $50 a year or more as an annual fee on

          your credit card. You may also be subject to finance charges of

          over 18%.



          REMEDY: If you are a good customer, the bank may be willing to

          drop the annual fee, and reduce the interest rate -- you only

          have to ask! Otherwise, you can switch issuers to a lower- priced

          card.



       5. INTEREST RATE HIKES ARE RETROACTIVE



          If you sign up for a credit card with a low "teaser" rate, such

          as 7.9%, when the low rate period expires, your existing balance

          will likely be subject to the regular and substantially higher

          interest rate.



          REMEDY: Pay in full before the rate increase or close the

          account.



       6. SHORTENED DUE DATES



          Most card issuers offer a 25 day grace period in which to pay for

          new purchases without incurring finance charges. Some banks have

          shortened the grace period to 20 days--but only for customers who

          pay in full monthly.



          REMEDY: Ask to go back to 25 days.



       7. ELIMINATING GRACE PERIODS



          That fabulous offer you received in the mail for a gold card with

          a $10,000 credit limit, and lots of features may not be so great.

          The most common "string" attached is the card has no grace

          period. You are charged interest on everything from the day you

          buy it, even if you pay on time.



          REMEDY: Throw the offer out!



       8. DISAPPEARING BENEFITS



          Many banks enticed you to sign up with extra benefits such as

          lifetime warranty, a 5% discount on all travel, or protection if

          an item purchased is lost. Now, some banks have cut back on these

          extras without the fanfare that launched them.



          REMEDY: Read annual disclosure of changes, and switch cards if

          need be.



       9. DOUBLE FEES ON CASH ADVANCES



          Most credit cards impose both finance charges and a transaction

          fee on cash advances. Interest starts from the day of the

          advance, and the transaction fee can be up to 2.5% of the amount

          taken. Beware of cards advertising "no finance charges."

          Transaction fees may still apply.



          REMEDY: Limit cash advances.



      10. FEWER RIGHTS ON DEBIT CARDS



          Some Visa and MasterCards have payments deducted directly from

          your checking account (debit cards). Under federal law, you

          technically don't have the same right to "charge back" problem

          purchases as you do with a conventional credit card. Also, if the

          card is lost or stolen, you can have up to unlimited liability

          for losses if you don't report the problem within 60 days, which

          is different from the $50 maximum liability on credit cards.

          (Exception: the $50 limit applies to debit cards as well as to

          credit cards in Massachusetts.)



          REMEDY: Know your card. Is it a credit cards or debit cards? They

          can look alike.



      11. MISLEADING MONTHLY MINIMUMS



          You may think it is beneficial to have a card where you only need

          to pay 2%-3% of your balance monthly. It is just the opposite.

          The bank stands to make far more money from finance charges the

          longer you carry out payments--and you foot the bill.



          REMEDY: Pay all you can monthly.



      12. INTEREST FROM DAY ONE



          When you carry a balance from month to month, there is no grace

          period on new purchases on most cards. The 20-25 day grace period

          where no finance charges accrue does not apply when you don't pay

          in full each month.



          REMEDY: Find cards that exclude new purchases when calculating

          interest.



     (C) 1994 Commonwealth of Massachusetts, Executive Office of Consumer

     Affairs.



     October 1994



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