By LAURA T. COFFEY
The average family with at least one credit card has a whopping $8,367 in credit card debt. To make matters worse, many of those families are locked into interest rates of 25 percent or higher, and they routinely get walloped with penalties of $30 or more, sometimes without realizing it. The following tips can help you avoid paying unnecessarily high interest rates and fees.
1. Understand what's going on. Credit card companies have become hooked on receiving fees and penalties from consumers who break their rules. In fact, fee income made up 28 percent of the companies' total income in 2001, according to CardWeb.com.
2. Monitor your credit report. Be aware that credit card companies scan your credit report from time to time in an effort to find late payments on other cards. If they spot one, they can hike the interest rates on their cards.
3. Read the fine print. No matter how outrageous the terms of some credit cards may be, the card issuer must disclose them. It's your responsibility to read the rules and adhere to them.
4. Beware of not-so-fixed rates. Here's what you're guaranteed if you have a fixed-rate card: The issuer must give you 15 days' written notice before changing the rate. So, carefully examine all notices that arrive with your bill.
5. Don't be even a little bit late. Payments are often due not only by a certain date, but by a certain hour of the day. One late payment could trigger a penalty of up to $35 and could lock you into a new interest rate of 29.5 percent.
6. Always pay more than the minimum monthly payment. Credit card companies often entice consumers to pay as little as possible each month so their balances will keep accruing interest. If you only make the minimum payment due, it could take decades to pay off your debt.
7. Shop around for a card with a minimum 25-day grace period. The grace period, or window of time before you're charged interest on new purchases, has shrunk from 30 days to fewer than 23 days on many cards, and some cards don't even offer a grace period.
8. Watch out for fees while you're abroad. Many card issuers have increased their currency-conversion fees on purchases made in other countries from 1 percent to as much as 4 percent of the purchase price.
9. Avoid cash advances. Cash advances result in fees and higher interest rates that begin accruing immediately, so even consumers who pay off their balances in full each month will face fees and interest costs.
10. Check the terms on a new card. If you're "preapproved" for a card with terms that sound fantastic, don't assume that's the card you're going to get. When the new card arrives, review its terms and make sure you got what you expected. If not, don't activate the card, and close the account.
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