Fool reveals credit card cons

The Motley Fool has recently reviewed UK credit cards and has uncovered ‘a dozen devious measures by banks to ensnare unsuspecting customers’. The Motley Fool says these measures will ambush those who use their cards sensibly as well as getting those who are in debt into worse trouble.

The tricks include setting the minimum monthly repayment at £5 over the interest and payment protection premiums, making debt repayment exceedingly slow. Some cards apply payments to the least expensive debt first, which means that the more expensive debt is racking up interest. With some lenders, the balance transfer fee is classed as a purchase and attracts interest at a higher rate, while typical APRs only apply to the most creditworthy borrowers.

Increasing your credit limit may tempt you to spend, while you may be bemused by payment protection insurance and credit card repayment protection, both of which may be a rip off says the Motley Fool. And watch out for late repayments. Not only might there be penalty fees, but you may lose that cushy 0 per cent deal.

Other ruses include displaying interest rates monthly, and look out for credit card fees, which may be as much as £275. Cash withdrawals and credit card cheques will cost you dearly and if you use your credit card for online betting, you might find that you are paying the cash withdrawal rate.

David Kuo, Head of Personal Finance at the Motley Fool, says:’Credit-card companies are increasingly targeting rate tarts and convenience users. In other words, they are picking on sensible customers who always pay their outstanding credit-card debts in full. The best way to combat these offensives is to read any material sent to you by your card provider to ensure that no changes to the terms are made without your knowledge. Changes can happen at any time. I suspect the next move may be the sliding credit line where customers’ credit limits are lowered once they reach it.’