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5 sneaky credit card tricks -- and how to beat the bank

By Jay MacDonald

Hey, buddy, want to see some card tricks?

We're not talking Three-Card Monte, Jumping Ace or Lost Kings here. No false shuffles, double lifts, swing cuts, pinky breaks or other classic sleights-of-hand.

We're talking credit card tricks. The expensive kind, in which over-limit fees, residual interest, default APRs and other surprises suddenly appear as if by magic on your credit card statement.

No, your credit card company isn't exactly dealing off the bottom of the deck. In each instance, they are within their rights to take your money, thanks to the often inscrutable terms of your cardholder agreement. But just like Three-Card Monte, these tricks can clean out your wallet faster than you can pick a card, any card.

Some of these tricks may soon be outlawed by the Federal Reserve Board's proposed Unfair or Deceptive Acts or Practices reforms. The public submitted a record 56,000 comments on the reform proposals. which the Fed says it will issue in final form by the end of 2008.

In the meantime, keep your eye on your statement, your hand on your wallet and watch out for these five sneaky credit card tricks.

1. The closing date mind crunch

Cardholder Lynnae McCoy thought she was doing the right thing when she switched from paper to paperless billing on her 0 percent APR card. When she didn't receive an e-mail notice of payment due around her customary statement date, she chalked it up to a transition glitch and made her normal payment at the usual time of the month.

The following month, her online statement showed that a late fee and interest had not only bumped her balance by $100 but shot her 0 percent introductory APR up to 11.24 percent.

To McCoy's surprise, it turns out the card company had changed her closing date to later in the month. "Apparently my payment was posted one day before the new

billing cycle began, so I ended up making two payments in one billing cycle and none in the next," McCoy says.

Columnist Liz Pulliam Weston, author of "Easy Money ," sees this happen frequently to folks who try to buff their credit score by paying off a chunk of credit card debt a month before they apply for a major loan.

"The way the credit card computer systems are set up, they are only looking for payments between the statement closing date and the due date," she explains. "So if you paid early and failed to make a second payment in that little window, then you're counted as late."

In other words, early birds get the shaft. McCoy admits she's one of the lucky ones because she didn't have other outstanding card balances whose rates may have similarly been bumped due to a highly controversial practice known as "universal default."

After repeated, lengthy phone calls, McCoy convinced her card company to drop the late fee and restore her 0 percent APR, "but they didn't take the interest off. It was about $37. I just gave up and paid it. There came a point at which my time was worth more than $37." The McCoys have since sworn off credit cards for good.

Solution? "Pay off the card," says McCoy. "That and persist. If you're thinking about going to paperless billing, really stay on top of it, and maybe even make a small extra payment in the middle of the cycle until you're sure when your billing cycle is."

Gail Hillebrand, senior attorney for Consumers Union has an additional suggestion: "I think it's actually quite helpful to not take paperless billing. I do think this makes it harder for the customer to hold up their end of the bargain and pay on time."

It's very confusing, when you look at your online statement in particular, to figure out how much you actually owe.

Category: Credit

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