When it comes to credit cards, banks are getting more aggressive about keeping you in debt. One of the ways that credit cards keep their customers in debt is by offering features that are not only useless; but extremely expensive to use.
Let's take a look at two those services:
- Convenience Checks - Convenience checks work just like checks you use with your checking account except that they continue to take money out of your pocket long after the transaction for which you used the check is finished. If you have a credit card, you've probably received a couple of checks in the mail with a promotional offer touting the benefits of using a convenience check. Don't buy it. These so-called convenience checks are nothing more than cash advances but only worse. Convenience checks can have interest rates as high as 25 percent and the interest begins piling up from the moment you use the check, meaning that you get no grace period.
- ATM withdrawal privileges - More credit card companies are sending out "nifty" pin numbers along with their plastic to new customers. They're encouraging their customers to use the ATM to withdraw cash instead of just using their credit card to make a purchase. Once again this is another debt trap with high fees associated with it. Many credit cards have a minimum fee on all ATM withdrawals, so you could end up paying 50 percent or more in fees for your cash withdrawal. Do yourself a favor, skip using your credit card like a checking account and forget the little pin number they send you.