Six things Effie Zahos hates about credit cards

Putting aside the ridiculous fees, the unconscionable interest rates and the fact that plastic can take longer to repay than a home loan, there are six other things that annoy me about credit cards

Limits on balance transfers

This is one of those traps you don't know about until you apply.

Balance transfer cards often have a limit on the amount you can transfer. In most cases, it's a percentage of the new card's limit.

Sounds crazy, I know - after all, the whole idea of these cards is supposedly to get you out of debt.

So if you've got a $10,000 debt to transfer, it's best to ask for a higher limit than your existing debt so that you're able to transfer the full amount. If you don't, you may end up with two cards and in a worse situation.

You have to beg for rebates

Swap your cards regularly and you'll pay dearly if your old issuer doesn't offer you a pro-rata rebate on annual fees. Annual fees are generally paid upfront.

Comparison site Mozo says that credit card providers are usually within their rights to not refund you a pro-rata amount but it has heard of cases where the issuer has refunded the fee, or a portion of it, as a gesture of goodwill.

If you are chasing bonus points with the intention of closing the card after you've got your points, it's best to apply for cards with bonus points that waive the first year's annual fee.

Interest-free days

The total number of interest-free days comes from the monthly billing process (generally 30 days) plus the time between the end of your monthly billing period and the due date, which is generally 25 days.

If you're buying big-ticket items, do it at the start of your statement cycle so you have more interest-free days to pay.

Your statement cycle should be on your credit card statement.

If your due date falls at an inconvenient time, some card issuers will change it to match your pay cycle. It's worth asking as they don't generally advertise this.

When 0% is really 7%

As many as 22 balance transfer credit card in total now charge a transfer "handling" fee.

I'm not sure what it's for, other than the obvious - to claw back some of the losses from giving a 0% introductory rate.

The total cost of transferring, say, a $5000 debt to a 0% balance transfer deal that charges a 3% transfer fee and, say, an annual fee of $199 is actually 7% annually, not 0%.

Don't be blinded by headline rates.

Ask if there are any other fees and charges and then get them to calculate the effective rate based on the amount you want to transfer.

Fees for shopping overseas

Make an international $1000 transaction using your card and chances are you'll be charged an additional $29 fee, or $14.50 on top of a $500 spend.

According to finder.com.au, the average fee is 2.9% but they can go as high as 3.5% of the purchase.

What's classed as a purchase

Buy a lottery ticket with your credit card or pay a bill and you could instantly lose your interest-free days.

Bill payments from your credit card can be processed as either a purchase or a cash advance.

It all depends on how the biller is set up with the BPAY payment service.

To find out whether a biller accepts credit card payments, visit BPAY, search for a biller, then look at the biller payment methods.

Luckily, finder.com.au says it's unlikely that any interest-incurring charges will cancel your interest-free period for the rest of your balance.

Instead, just those "cash advance" transactions will accrue interest, not other purchases you make during that period, provided you fulfil your card's interest-free condition, generally by paying off the balance in full each billing cycle.

Effie Zahos' third book, A Real Girl's Guide to Money: From Converse to Louboutins, is on sale from March 1

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