What Your Credit Card Company Will Not Tell You

2006-09-08

Credit card companies will often forget to tell you about how fast your interest rates will go up when you fail to make your payments on time. It is actually in their best interests to leave you in the dark until after the fact, because this is how they make billions of dollars a year. Credit card companies are quick to make money on the irresponsibility of their customers. The phenomenon of raising your interest rates when you are late making even one payment is called universal default. In some cases, interest rates have been known to increase as much as 25 percent. The best way to avoid this problem is to research the policies of the company before you decide to get a credit card.

Don't expect them to tell you everything you need to know over the phone. Read the terms of service and find out if they have universal default. If they do, avoid signing up for their card. If you want to get a credit card, you may also find it useful to look at your bill payment track record. Do you pay your bills on time? How often have you been late paying a bill in the last six months? The answers you give to these questions will determine whether you should get a credit card or not. Credit card companies also forget to tell you that they are one of the major causes of the increase in identity theft.

To be fair, some of the responsibility of identity theft falls on the consumers. Despite this, how many times have you heard about a credit card company or bank exposing the data of millions of their customers inadvertently? How many times have you received credit card offers in the mail simultanteously from multiple credit card agencies? What this means is that credit card companies, banks, and agencies share you rinformation with each other. The problem is, it may fall into the wrong hands. To solve this problem, call the credit agencies and tell them to take you name off their mailing list. Shred sensitive documents before throwing them out.

Many credit card companies will also forget to tell you that their "free rewards" programs are not free at all. In the competitive world of credit cards, the use of rewards are a tactic that banks will use to acquire high value customers. This is why the are offered for things like "frequent flier miles." What many credit card companies won't tell you is that their "free" rewards program will come with higher interest rates or annual fees. Before you get a credit card with rewards, research the company to find out what they're getting out of it.

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