How much do credit cards cost you?

Q. How much do credit cards really cost you?

A. Good luck figuring that out.

Credit card issuers don’t make it clear. They write murky
disclosures, bury important terms and even include unnecessary
information.

Many consumers don’t understand such important facts as what
they’d be charged for making a late payment or what would cause their
interest rate go up, according to a recent study of the nation’s
largest card issuers by the Government Accountability Office, the
investigative arm of Congress.

You may think you know your interest rate because it’s in a
big-type box on your credit card agreement. But you have to learn how
the balance is added up to get your true cost.

There’s a particularly insidious practice called double-cycle
billing that makes it next to impossible to know what you’ll be paying
on a purchase. Not all cards use it, but if yours does, watch out. Read
the fine print especially the part about how the credit company
computes your balance.

The GAO report says it can work this way: You charge $1,000
on the card. You make a payment on time of $990. The next month, you
thought you’d be paying interest on the remaining $10. You’re not. The
card figures interest based on two payment cycles. What you owe is
based in part on what you’ve already paid off. The end result: You are
charged $11.02 in interest, instead of the 11 cents you would have owed
on $10.

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