What Credit Card Companies Don't Want You to Know
Credit card companies are required to clearly outline their policies to consumers, but those policies are cleverly hidden in tiny print on the backs of card agreements and billing statements. In the event that you do attempt to read the fine print, do not be surprised if the language used is so confusing you have trouble understanding what you are reading.
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Fees
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In 1996, the Supreme Court ruled that a credit card company is free to charge whatever late fees the company deems appropriate . Because of this, you can expect a hefty fee if your payment is late. Even if your payment arrives on the correct day, it must be received by a certain time on the due date in order to be considered timely. If your payment is processed even an hour late, you can be held responsible for late fees.
Interest Rates
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Low-interest credit cards do not always remain that way. Your credit card company can choose to raise your rates at any time for any reason. If you are late on a payment or go beyond your credit limit, or the credit card company deems the current economic climate to be threatening to its financial security, you can expect to see an increase in your rates. Your credit card company is allowed to monitor your credit report. If you are late on a payment to any other creditor, you can expect to see your credit card rates spike.
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Balance Transfers
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On the surface, balance transfers seem to be a great idea to get out from under a credit card that carries a high interest rate, but beware the fees associated with balance transfers. Your credit card company does not want you to transfer your card balance and will charge you dearly to do so. Expect to pay up to 4 percent of the balance on your card just for the privilege of changing credit card companies. In addition to fees from your home institution, your new card may come back to bite you in the end. Your low interest rate on balance transfers can be revoked if you charge anything to your card before paying off the transferred balance. Always read the fine print.
Cash Advances
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Cash advances carry a higher interest rate than standard purchases. Expect to pay a fee just to use your cash advance option. Even worse, some companies will apply payments you make to your card balance before applying those payments to your cash advances. This causes you to accrue more interest, which means bigger profits for your credit card company. Cash advances also rarely have a grace period, so interest begins to build up right away.
Credit Insurance
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Credit insurance guarantees that, for a monthly fee, if you become disabled or lose your job, your credit card company will make your minimum monthly payment for you, and in the event of your death, your card balance will be forgiven. What they neglect to tell you is that your loan balance is automatically forgiven when you die simply because they cannot legally hold someone else responsible for your debt.
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References
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