When it comes to credit cards, it's easy to make a mistake with significant financial consequences. However, the right approach can safeguard us against some of those unfortunate situations, or at least make them a little less unpleasant. In this guide, we’ll go over a few common mistakes people make with their credit cards and explain how to anticipate and deal with each.
Applying Right Before a Bonus Gets Better
Those who play the rewards-game are familiar with this nightmare scenario. You apply for a card and immediately after you're approved a significantly better bonus offer rolls out. With credit card rewards hitting all-time highs, this is a bigger problem in 2017 than ever before. There is something you can do if this happens to you. Call your bank and complain. Though an old piece of advice often given to unsatisfied customers, this approach can work with credit card bonuses. Calmly explain your predicament to the customer service department. Sometimes they may be willing to apply the new bonus to your account, assuming too much time hasn't passed. Don't expect them to be lenient if your account is several months old and the new bonus just came out. You can achieve the best success rate when you missed the bonus by just a few days or (at most) weeks.
Missing a credit card payment can hurt in more ways than one. Assuming you just miss one payment, odds are you will be facing just one penalty: a late fee. These will vary depending on your issuer. However, they typically don’t exceed $35. The moment you catch your mistake, you should pay your bill immediately. This can prevent other unpleasant consequences. Just like dealing with bonuses, a quick call to your issuer may also help remedy the late fee. If this was a one-off and you have been a diligent customer up until this point, they may be willing to refund your late fee.
A select few credit cards come with late fee forgiveness as a feature. However, even if that’s the case on your credit card, you shouldn’t learn to rely on it. In a way, a late fee can be a good thing. It uses negative reinforcement to help make sure you remember to pay on time. Even if you don’t get charged a late fee, other consequences may still apply. For example, multiple missed payments can lead to a penalty APR being triggered on your account – this is something we explore in the following section.
Triggered Penalty APR
Many credit cards include a provision in their contracts called penalty APR. This is a special interest rate that kicks in if you become delinquent on your bill. Penalty APRs typically vary between 27% and 29% -- this is significantly higher than what you'd normally have to pay. Unlike many other items on this list, there isn't a quick fix for this. If you trigger a penalty APR you need to focus on correcting the behavior that led you to it. Start making your payments on time, and eventually your interest rates can go back to normal. After six months, your issuer is legally required to re-evaluate your account. Assuming you have not missed any payments your penalty APR must be put back to normal.
Lost Your Credit Card
Losing your credit card can be both scary and annoying at the same time. If this happens to you, the first action you should always take is to contact your bank and let them know about the loss. Doing this will limit your exposure – you can often have any fraudulent charges reversed in case someone found and used your card. Unfortunately, you are still saddled with all the other inconveniences that can arise. Here's a few things you can do to make the process a little less unpleasant:
- Have your card numbers written down in a secure place. When you lose your card and call the customer service line, you may be asked to initially provide this information. While there are other ways to verify your account and identity, it’s easier if you have those number ready and on-hand. It will make the call about losing your card that much easier. If you fail to do this, don't worry. You can always verify your identity in other ways, such as providing your social security number.
- Make a list of all the recurring payments that rely on your card. If the card you lost pays for your Netflix, Hulu, utilities or other services, you will need to update them with your new card number once it’s issued. It can be a major hassle trying to remember what all those places are. That’s why it’s good practice to keep a list handy, in case you ever need to make this type of update.