I got a sweet offer from a bank for a new credit card: no interest for 12 months, free transfer from other cards, etc. It had a $6,500 limit, so I felt so smart when I transferred most of my other balances to it. The total balance was just less than $6,400. I planned to pay down a couple of extra thousand dollars in principal that year with the savings from interest.
I was about to go on a two-week out-of-town trip deep in the mountains where I'd be off-grid. To avoid any stress and billing problems, such as a missed payment, I paid my bill before I left.
While on the trip, I charged some small purchases to the card -- fries, a magazine and dog food -- to take advantage of the interest-free offer. These purchases were no more than $10.
When I got home, I logged into my credit card account and almost fainted when I saw my balance. Turns out, since I had paid my bill eight days before the due date, the credit card company had happily taken my money but not applied the early payment to my payment due. Therefore, they considered my payment late, defaulted me to a 14.99 percent interest rate, charged me a $35 late fee and assessed a $200 interest charge; all of which put me over the credit limit. They also added $39 fees for each of the three times I used my card during the trip. Since I was "late" and "over the credit limit," they put me in the default interest rate category -- a crushing 34 percent of my bill that totaled more than $6,500. And finally, just in case I thought I'd transfer those balances back to their original cards where I'd been paying between 8 percent and 14 percent in interest -- those other cards followed suit and also put me on the default interest rate.
Needless to say, I now bank at a credit union.
-- Nicole from Georgia
Make sure this doesn't happen to you: Read credit card details about added fees and payment procedures before charging anything.