10 Credit Card Traps 1. Hidden Transaction Fees Fees for cash advances, balance transfers, and quasi-cash transactions like the purchase of lottery tickets significantly raise the cost of these transactions. But the terms governing these transactions are buried in the fine print where consumers can easily miss them. Minimum fees, also stated only in the fine print, allow credit card companies to guarantee themselves high fee income regardless of the transaction amount. In 1998, by contrast, penalty APRs were an average of 4.5 percentage points higher than regular APRs.
Some cards have no grace periods at all.
These sharp rate increases are not prominently disclosed. Low minimum monthly payments are designed to sound attractive to consumers, but they encourage cardholders to pay more in finance charges as the length of time required to pay off a balance increases significantly. The lower-grade card costs more and offers less attractive terms, facts which are rarely mentioned in the official disclosures of the offer. This new, anti-consumer practice is catching on quickly with credit card companies. The company then assigns an APR to each applicant once the card is issued, based on the applicant's credit history.