Credit Card Company Abuses
Credit Card Company Abuses
The company that issues you a credit card may have ulterior motives other than to just collect interest on unpaid balances. Frequently the issuer will change the terms and interest rate of a particular card with proper notice to you. There may also be hidden fees that you are unaware of.
Some of the ways credit card companies can increase the amount you pay for your credit card include:
UNIVERSAL DEFAULT. In this instance even tho you may have excellent credit and a perfect payment history with this particular card, you may have made a late payment on lets say your car payment which is totally unrelated to your credit card. Some credit card companies routinely do credit checks on their customers. If they notice that you were late on one payment on your auto loan, they may decide that you are now a credit risk and they will go ahead and raise the rate on your credit card. They may also raise the rate if they see that you are close to your limit on another credit card or that you even applied for another credit card.
Credit card issuers will look to raise your interest rate based on other factors including, the number of late payments on other credit cards, or loans, applying for a number of other credit cards, exceeding your spending limit on another card and a decline in your credit rating. All this in spite of the fact that you are in good standing with the credit card issued by this particular bank.
To protect yourself read the fine print when applying for credit cards. If there is a universal default clause, do not sign up for the card.
BAIT AND SWITCH. You receive a letter from a credit card company stating that you have been pre-approved for a low interest credit card, but the fine print states that people who do not qualify for the low interest rate offered may be issued a card with a higher rate. Guess what? You receive your new card with a much higher interest rate than the teaser rate initially offered.
OVER LIMIT FEES. Instead of a bank declining your purchase because you have exceeded your spending limit, they will allow the transaction to go through but will then turn around and charge you an over limit fee, which may be substantial. This fee may continue to be charged to you until you have paid down your balance and gotten below your credit limit.
If you know you are going to be over your limit and absolutely have to use your credit card it would be a better idea to call your lender and see if you can get an increase in your spending limit first.
The most important thing a consumer can do is ALWAYS read the fine print. If a credit card offer sounds too good to be true, it probably is.
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