A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Sunday, January 16, 2005

Be Careful Which Credit Card You Use

I'm not a fan of any credit cards. But, some are worse than others. You see, some cards use what's called two-cycle billing. Two-cycle billing means that the average daily balance is calculated on a two-month cycle rather than the 30-day cycle used by most credit card companies.

My big beef with two-cycle billing is that credit card holders are paying interest on money that they've already paid off. Here's a really good article called How Finance Charges are Calculated on Credit Cards that I found on the University of Kentucky College of Agriculture website. This article is definitely worth checking out.

One other thing to remember is that some charge interest DAILY. So, if you have carried a balance on your card for more than a month and you get a statement that says you owe $500 and you want to pay it off, you have to call the company and find out what your finance charges are BEFORE you send in your payment. If you just write a check for $500 and send it in, you will get another statement with a new balance on it for the amount of interest you owe.

So, how do I know all this? EXPERIENCE!

Just make sure you read ALL the small print BEFORE you sign up.

Until next time...