Credit cards became popular during the eighties and nineties. At some point, credit cards have also became an essential part of the daily American grind. From credit-card only payment found online, to the convenience of not running in to pay for gas, to the rummaging for change to pay for a burger, credit cards have become second nature to paying for every cost imaginable.

Current census estimates place US adult population around 287,524,305. Of those, more than half own at least one credit card.

Credit, when used wisely can have a beneficial cost. They can be the difference between getting your car back on the road, or covering an unexpected medical expense by buying you the time you need to repay the financial costs. However, for many credit card holders, there are unspoken costs when used as a form of short term credit.

First and foremost is the interest. Credit card companies make money by charging interest. For a $100 purchase, paying the minimum cost on your credit card each month, you will make 11 monthly payments and pay 7.50 in interest. Credit card companies know that this is not the ideal scenario. They try to lure you with promotional interest rates into racking up more and more debt. The same APR for a $2000 purchase, would require 263 payments and cost you $2784 MORE in additional credit card interest.

In addition, credit card companies want lazy customers who can “just get by.” The costs of a credit card whose balance is paid in full each month often can be nominal. But credit card companies know a large percentage of credit card holders will at some point miss a payment. Missing payments allows the credit card companies to charge around $40 in late fees, often throwing maxed out cards over-limit for another $40 charge.

In addition, credit card holders who all the sudden find a purchase now carrying an extra $80 balance will also incur “default APR” which can in many circumstances be between 27% and 33% in extra credit card interest yearly. This costs big bucks. Taking a look back at the $100 example, the credit card would cost $25 monthly minimum payments, and 62$ in interest all the sudden!

Another strategy of Credit Card companies to help increase your costs are incentive programs designed to facilitate your spending on short-term credit purchases. These are usually in the form of miles, points, or introductory savings. Gasoline is a favorite area for many credit cards to hook you.

Instead of a juicy worm, they get you to incur costs by offering you 25$ off your gas purchases. They also tend to have hidden print terms like “25$ off the costs by using your credit card on 100 gallons of gas on Mondays between 9-1-1803 and 9-2-1706” or requiring you to fill out rebate forms.

Smart consumers if they know they are going to miss an occasional payment, or find they have just missed a payment will IMMEDIATELY contact the credit card issuing company about waiving the costs incurred by the late fee. Most credit card companies will move back the payment date at least once every year or two for good paying customers. Taking the extra five minutes to contact the credit card company can really cut your costs of credit card repayment.

Yet another trick credit card companies use to increase your costs is to offer consolidation offers. While consolidation can be a valuable tool, credit card consolidation carries costs and additional responsibilities. The introductory rate with the balance transfer can often plus the extra credit arm room and cause consumers to incur more costs. At some point the reality of credit cards and their hidden costs disappears and for many individuals, credit becomes a nightmare.

As a smart consumer, your job is to find credit cards that offer not only viable lines of credit, but do so with low annual rates. Opt for lower annual APR over introductory offers, utilize consolidation as a tool to pay down the principle and immediately cut your costs by cutting your credit card. Also, if you feel you have been doing well on your credit card payments, call the credit card company and ask for a lower annual percentage rate, or if you do find yourself with escalating variable rate interest, ask to switch to a fixed rate interest.

By taking these simple steps to educate and advocate yourself on the obvious and hidden costs present in your credit card agreement, as well as the initiative in communication problems with paying will serve to further your understanding of credit cards and their costs, both hidden and obscure.