Gotchas for Those Who Pay Their Balances

Once you get your balances paid off, you can breathe a sigh of relief that you're no longer held hostage to the credit companies' rate games.

That doesn't mean you can lower your guard entirely. Because about 40% of credit card customers pay off their balances in full each month, card companies look for ways besides interest charges to ding them as well.

Late and over-limit fees are the obvious ways credit card companies can still get you, but there are others as well:

• Cash-advance fees. There are few more expensive ways of getting cash than using your credit card—loan sharks come to mind. Typically even the lowest-rate cards charge 19% or more when you get cash, and the charges start from the minute you pull out the money. There is no grace period, even if you don't otherwise carry a balance. (The grace period is the time before interest charges accrue.)

• Less grace. Speaking of grace periods, those have been shrinking as well. It used to be that if you didn't carry a balance, you had about 30 days from the day your statement closed before you had to pay interest. If you paid within that grace period, no interest charges would be due. Now the average grace period has slipped to 23 days, and sometimes even less; a few cards have no grace period at all, even if you don't carry a balance. (If you do carry a balance, there's no such thing as a grace period; your new charges begin accruing interest immediately.)

• Conversion fees. Taking your credit cards overseas used to be a great deal. You'd get the same great exchange rates that big banks get, instead of the lousy rates usually offered to tourists at storefront exchange outfits.

  You can still get those boffo rates, but the advantage has been dulled since card companies charge a 1% to 2% fee on top of the 1% fee typically charged by Visa and MasterCard.

  If you have more than one credit card, you might call and ask your issuers what their currency conversion fees are and take the card with the lowest one. (Frequent travelers recommend taking a backup card as well. Some merchants don't accept American Express, for example, but do take Visa or MasterCard. Also it's smart to call your issuers before you leave and let them know what countries you'll be visiting; otherwise, their fraud-sniffing software could see the overseas transactions as a sign of theft and shut down your ability to use your card.)