1. Credit card companies can modify the terms of the credit card by giving just 21 days notice.
We get accustomed to credit card companies keeping the status quo on our cards but did you realize they can alter any of the terms for any cause.
For instance, they can increase the late payment fee and even cut your credit line shorter. If you are late just once, the low rate you are currently being charged can double or even worse, close your account altogether. Banks are becoming stricter so watch out for these things.
2. Credit card companies can increase the rate, affecting the cost of a purchase months after you bought it.
For example, if you purchased an HD TV 3 months ago, using a card which at the time was costing 10% APR, and you are late with just one payment, the credit card company can charge an interest rate of 29.9% APR, on top of a late payment fee.
That HD TV you bought a few months back might end up costing you twice as much by using a credit card.
3. Discount offers are only good when...
Those 0% balance transfers and initial periods can disappear quickly if you aren't paying attention. Failure to keep track when the rate will adjust can cost you.
Banks don't tell you when your 0% introductory period is ending (why would they, they make more money off you if they don't). Always follow up to see when the debt you owe on the card will be charged interest.
4. It’s not just your credit card payments you have to keep up.
If you are delinquent on your mortgage payment, or your car or any other debt, your credit card companies can reevaluate your credit score and increase your interest rate accordingly.
This is smart on their part but how unfair would be if it was an honest mistake such as you losing your job. It’s like the ones who need the most help get the worse help than those who don't need it as much.
5. Credit card companies make record profits from you.
Well, that may be something you did know but banks and credit card companies are in business in getting you into debt.
The more debt you have, the more money they can potentially make off you through interest and fees.
Their favorite customers are actually late payers and irresponsible people who don't understand financial numbers. There is a solution though. Educate yourself. For example, the difference between a credit card balance of 10,000 with a 10% APR vs. a credit card with 20% APR is about $4,000 dollars in wasted interest payments.
Soak in this knowledge and expand your mind. Credit card companies are not necessarily there to help you out of debt but the exact opposite. They dangle these teaser interest rates and hidden fees which can turn into a nightmare. Not all credit cards are bad; you just have to know how to use them properly.