Credit Cards: Important Information the Credit Card Companies Don't Want You to Know

Just about everyone has at least one credit card. Have you ever taken the time to read the terms and agreements? You are probably just like the majority of people that never read their terms and agreements. First of all some of the language can be confusing to understand. The next thing to note even you can understand it the credit card companies pack so much information into the terms and agreements that it can be cumbersome to read.

Credit cards can have a fixed or variable rate. If your rate is fixed it stays fixed the entire time you have your credit card, right? This is not true. A credit card company can increase your rate any time they want. The only requirement is that they have to give you written notice prior to the increase. Variable rates can definitely go up.

Isn't there a cap on how high an interest rate can go? It all depends. There are some states like Delaware where there are no usury laws which means credit card companies that have their head quarters there can charge you whatever interest rate they want to, even as high as 30%. This does not mean they will charge everyone 30% but those customers that have no chance of getting a lower rate elsewhere could become victims.

Credit card companies love it when you are late. A late payment leads to a late charge sometimes as much as $39. You also incur more finance charges and all of these things help to push you over your limit. Once you go over your limit you incur an over the limit fee which could be as much as $39. All of these things add up to profit for the bank.

Your credit card agreement probably has an arbitration agreement in it. This means that if you have some type of dispute or disagreement you agree to have a third party become an arbitrator to work out a solution between you and the credit card company. This also means that you give up your right to have your case heard in a court of law. Arbitration is normally faster and doesn't not cost as much as legal action. Is there a downside? Sure there is. A whopping 94% of arbitration cases are decided in the credit card company favor.

If you have two different balances on your credit card the balance with the low interest rate always gets paid off first. For example if you do a balance transfer, in the amount of $3,000, with a zero percent interest rate but you already have a balance on the credit card for $2,500 with an interest rate of 15% all of your payments will go to the $3,000 balance first. In fact you will have to pay off the entire zero percent balance before payments even begin to get applied to the $2,500 balance with a rate of 15%. What this means is on average you are accumulating interest charges of $30 (estimate), every month while that balance is sitting there.

If you have a zero percent promotional rate and you are late with a payment your promotional rate goes away and it's replaced with a new rate which could be more than 20%. What a difference that makes.

When you get your credit card statements you may notice that the amount of time you have to send in your payment is not as much as it used to be. Once your payment is late all sorts of things can happen. As previously mentioned you could lose a promotional rate, get charged a late fee and you payment could increase to include the amount of the late charge. If you are struggling, with your budget, this can be devastating.

That's why there is so much talk about legislation and getting the rules and regulations changed for credit cards.

Source: http://www.themint.org/kids/credit-card-facts.html
Source: http://www.bargaineering.com/articles/50-fun-facts-about-credit-cards.html