10 Things You Should Know About Credit Cards
1. Credit Card companies have the right to change your rate at any time. All they need to do is provide 15 days notice. The company hopes you will discard the notice thinking it’s junk mail, never notice and make them rich.
2. Cards with 0% interest rates are not what they seem. Cards with too-good-to-be-true introductory rates usually last for 6 months to a year at most. When the intro period ends, you will often be charged “back interest” from the first day you opened the card.
3. Many 0% cards are only 0% for balance transfers, not for new purchases. Initiating a balance transfer will probably cost you about 3% of the balance.
4. If you are even one day late in paying ANY of your bills, many credit card companies reserve the right to give you a default rate of as much as 39% in some states. This new trick is totally legal and is called The Universal Default Clause. Read more about it here.
5. Perks like cash back, points and airline miles do not work in your favor. By the time you’ve earned anything even slightly worthwhile, you will have already paid thousands of dollars in interest.
6. After your introductory “teaser” rate ends and you’ve racked up a huge balance that you initially thought you could pay off, the rate is now sky high and even more difficult for you to pay off.
7. Credit Card companies frequently use the old “bait and switch” technique: they will attempt to trick consumers into getting their card by offering 0% (or some other low rate) then send the actual card and agreement in the mail at a much higher rate hoping you won’t notice.
8. Your minimum payment is almost all interest. Therefore, your minimum payment is designed so that you will never completely pay the card off. Check your next credit card statement and compare the monthly finance charge to the minimum payment for proof.
9. If you don’t have established credit, you will probably get stuck with a card with a very small limit, a very high interest rate, an initial administration cost and annual fee. Your card will often divide these costs over 12 months so that even if you aren’t using your credit card, you will owe the credit card company something. Another excuse for them to say you are late and slap you with more fees.
10. You have the right to demand changes to your credit card terms. You can try to negotiate a lower APR, a longer grace period or smaller annual fee. If they do not agree, tell them that you would rather not do business with them anymore and would rather take a competitor’s better offer. Chances are they’d rather hang on to you as a customer and will grant your requests.