Credit Card Traps - OSPIRG Students (2024)

Six tips to avoid the credit card trap:

1) Shop around before getting a card.Read the fine print. Deceptive terms and conditions abound throughout the industry. Look for:

An APR of 15% or lower, even after the “introductory period”
No annual fee, or one that you can afford
Late payment fees no higher than $20
Late payment APRs no higher than 20%
No clauses that give the credit card company power to “change the terms at any time for any reason including no reason”.

2) Use credit cards sparingly.

Remember that credit card purchases are more expensive than cash or check purchases once interest and other fees are included.
If you can’t pay off the balance each month, avoid using them for day-to-day purchases.
Carry only one or two major credit cards.
Avoid using the full available credit line.

3) Pay off balances in full each month.

Companies keep the minimum monthly payment low so that you rack up additional debt in interest – that’s how they make money on you.
If you can’t pay off the card in full, then make the largest payment possible each month.

4) If you have a problem paying, seek help.

See if the school has a financial counselor you can consult with.
Consider cutting up (or locking up) your card and paying it off in a timely manner with a personal loan from a family member.
Beware of unscrupulous “debt management” operations. Avoid companies that require an upfront payment, including high fees, agents paid on commission, or give you the hard sell.

5) Call your credit card company and ask for a lower rate.In a recent OSPIRG survey, over half the consumers who called lowered their rates by a third or more.

6) Know your protections as a consumer.A new federal lawrequires credit card companies to be more transparent, limit unfair fees and interest rates. If you believe your credit card company has gone over the line and has failed to address your problem, file a complaint with the following: