New Credit Card Offers: Watch for Tripwires

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Credit card companies are once again becoming aggressive about credit card offers. But with the new CARD Act reform fresh in the rearview mirror, they’re trying some new tactics to separate you from your money.

What are card companies doing, and how can you fight back? Let’s take a look.

First. Let’s set the table with some numbers. U.S. credit card companies have sent out 481 million credit card offers in the first quarter of 2010 alone, according to Synovate Financial Service. That’s up 29% over the first quarter of 2009 — a sure sign that card issuers are being more aggressive about attracting more customers.

But what’s included, deal-wise, in those envelopes in your mailbox may not be in your financial interest. Here’s a look-see:

Watch out for “fixed” rates. Card companies may offer you a low introductory rate, but watch out. It’s only “fixed” for the first 30 days. After that, all bets are off — credit card companies can still raise the prime interest rate on your card without notice if you pay your bill late.

Watch out for big cash advance fees. Prior to the CARD Act, card companies might have given you 0% interest on cash advances off your card for a full year or more. Now, to squeeze more profits from cardholders, credit card carriers are shortening that timeframe to less than six months — at which point you can expect to pay higher interest, and higher cash advance “management” fees of up to 5%.

Watch for “deferred” interest. You might get a card offer with 0% interest for six months, no annual fees and a low, fixed interest rate below 10%. Sounds good, right? But you need to factor in the “hidden” costs that card issuers don’t want you to know about. For instance, credit card companies can charge “deferred” interest if your payment for the complete balance amount isn’t satisfied by the time the promotional period closes out.

Watch for overseas fees. Some card companies — hello, Discover (Stock Quote: DFS) — have slapped a fee (2% in Discover’s case) on purchases outside the U.S.

Watch for “rollover” fees. It used to be that card companies would charge 2% or 3% to roll over a balance from one piece of plastic to another. But that rate is going up — the Web site LowCards.com reports that JPMorgan (Stock Quote: JPM) has jacked up its rollover rate to 5%.

What’s your best move to uncover “hidden” fees and penalties in a card offer? It isn’t rocket science.

Make sure to read all the fine print on your new card offer. If you’re hung up on some of the language, take it to a financial adviser or to your local bank’s customer service department. They’ll likely be glad to help you — it could mean more business for them down the road.

It’s no secret that credit card companies are becoming more aggressive about card offers. But it’s your job to make sure there are no “secrets” that go unrevealed before you sign on the dotted line.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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