Beware Credit Card Users--It Is All In The Fine Print

Authored By: Durre Qureshi

Not reading the fine print of the credit cards you use is a sure invitation to have your blood sucked. Now a days millions of people are using credit cards to make purchases. If you pay for anything with a credit card, then beware that the 9% interest rate you thought you were locked into could actually go as high as 30%, and you might not know it until you get slapped with the bill-retroactively.

"Penalty interest rate" and "universal default" are provisions included by banks in their credit card offers which they claim are necessary to offset risks. These provisions are legal as long as issuers can say they warned you. The rates and fees in these provisions are all out of proportion to the risks. Issuers have used better ways in the past to protect themselves. For example, they used to cut customers off after they hit their credit limits, which I think was a good thing for the user.

Now they let you keep spending so they can charge you over-limit fees (as much as $29 per billing period) and permanently higher rates. This can be devastating for the budget of many users. So be careful--always read and understand the fine print before it is too late.

Never pay your credit card bills late even by an hour as your interest rate can be increased permanently. In May 2004, according to the testimony by credit card issuers before the Senate banking committee, $14.8 billion (or 11% of their revenue) were collected on penalty rates --which averaged about 24% this year according to the Consumer Action. To make things worse for the user the new rates can be applied retroactively to purchases already made. Companies usually specify an exact time by which payments must be received. If they don't specify it, you should contact them to find out.

Be aware that even if your mortgage or other payment is late (under the "universal default") credit card issuers can raise your rates because you are now classified as high risk. One bank was found charging a 35% universal default rate by Consumer Action.

Having too many inquiries into your credit history can also trigger universal default rate and you may be charged a fee thus lowering your credit rating.

Credit card issuers made $7.7 billion on penalty fees in 2003. There is no legal cap on banks' interest rates. And the Supreme Court in 1996 prevented states from setting limits on late fees.

Legislations are underway to ban the "universal default" interest rates based on alleged missteps with another issuer, ensure that penalty fees match issuers' costs and ban over-limit fees. Whether this actually happens or not time will tell. But until then you have to be extra careful and read every fine print because it is all in there.

Durre Qureshi is the owner of GetSolidCredit.com. Apply for Multiple Credit Cards Today! Get 0 Annual Fee Credit Cards OR Review and Compare the Best Deals on Credit Cards All In One Place!

Article Source: http://www.FinanceNook.com
Your One-Stop Quality Finance Article Source

Home | Credit | Credit Cards

Read Additional Related Articles from the Credit Cards Category

Listed below are more articles related to the above article.

People interested in the above article "Beware Credit Card Users--It Is All In The Fine Print" are also interested in the related articles listed below:

Extra Options For Your Credit Card - By : Peter Kenny
Credit Card Traps? - By : Joseph Kenny
Credit Card Debt - Do You Feel Frustrated - By : Scott Knutson
How To Use A Secured Credit Card To Repair Your Credit - By : Ryan Cote
The History Of Credit Cards - By : Ed Vegliante
Simple Methods To Reduce Credit Card Debt - By : Peter J Kenny
Minimum Monthly Credit Card Payments On The Rise - By : Ed Vegliante
Gas Rewards Credit Cards: A Look At The Top Three - By : Ed Vegliante
Credit Cards Gone Wrong - By : Joe Kenny
Credit Card Debt: Coping Tips - By : Jeanette Joy Fisher

Read more related articles in Home | Credit | Credit Cards

Return Home

FinanceNook.com Home

Featured Sites

Internet Marketing
Website marketing strategies and tips for promoting a business online

Small Business Marketing
How to get more customers or clients than you ever dreamed possible

Social Bookmarking

Bookmark on del.icio.us

Popular Articles

RSS Feeds

FinanceNook.com Home | Top of Page

United States of America . United Kingdom . Canada . Afghanistan . Albania . Algeria . American Samoa . Andorra . Angola . Anguilla . Antarctica . Antigua & Barbuda . Argentina . Armenia . Aruba . Australia . Austria . Azerbaijan . Bahamas . Bahrain . Bangladesh . Barbados . Belarus . Belgium . Belize . Benin . Bermuda . Bhutan . Bolivia . Bosnia-Herzegovina . Botswana . Brazil . British Virgin Islands . Brunei Darrusalam. Bulgaria . Burkina Faso . Burundi . Cambodia . Cameroon . Cape Verde . Cayman Islands . Central African Republic . Chad . Chile . China . Colombia . Comoros . Congo . Congo (Dem. Rep.) . Cook Islands . Costa Rica . Côte d'Ivoire . Croatia . Cuba . Cyprus . Czech Republic . Denmark . Djibouti . Dominica . Dominican Republic . East Timor . Ecuador . Egypt . El Salvador . Equatorial Guinea . Eritrea . Estonia . Ethiopia . Falkland Islands and Dependencies . Faroe Islands . Fiji . Finland . France . French Guiana . French Polynesia . Gabon . Gambia . Georgia . Germany . Ghana . Gibraltar . Greece . Greenland . Grenada . Guadeloupe . Guam . Guatemala . Guinea . Guinea Bissau . Guyana . Haiti . Honduras . Hong Kong . Hungary . Iceland . India . Indonesia . Iran . Iraq . Ireland . Isle Of Man . Israel . Italy . Ivory Coast . Jamaica . Japan . Jordan . Kazakhstan . Kenya . Kiribati . Korea (North) . Korea (South) . Kuwait . Kyrgyzstan . Laos . Latvia . Lebanon . Lesotho . Liberia . Libya . Liechtenstein . Lithuania . Luxembourg . Macau . Macedonia . Madagascar . Malawi . Malaysia . Maldives . Mali . Malta . Marshall Islands . Martinique . Mauritania . Mauritius . Mexico . Micronesia (Federated States) . Moldova . Monaco . Mongolia . Morocco . Mozambique . Myanmar (Burma) . Namibia . Nauru . Nepal . Netherlands . Netherlands Antilles . New Caledonia . New Zealand . Nicaragua . Niger . Nigeria . Niue . Norfolk Island . Northern Mariana Islands . Norway . Oman . Pakistan . Palau . Palestine . Panama . Papua New Guinea . Paraguay . Peru . Philippines . Poland . Portugal . Puerto Rico . Qatar . Reunion . Romania . Russia . Rwanda . Sahara . Saint Helena . Saint Kitts and Nevis . Saint Lucia . Saint Pierre & Miquelon . Saint Vincent & The Grenadines . Samoa . San Marino . São Tomé & Príncipe . Saudi Arabia . Senegal . Serbia . Seychelles . Sierra Leone . Singapore . Slovakia . Slovenia . Solomon Islands . Somalia . South Africa . Spain . Sri Lanka . Sudan . Suriname . Swaziland . Sweden . Switzerland . Syria . Taiwan . Tajikistan . Tanzania . Thailand . Togo . Tongo . Trinidad & Tobago . Tunisia . Turkey . Turkmenistan . Tuvalu . Uganda . Ukraine . United Arab Emirates . Uruguay . Uzbekistan . Vanuatu . Vatican City (Holy See) . Venezuela . Vietnam . Yemen . Zaire . Zambia . Zimbabwe

Template Design by Larry Lim | Powered by Article Dashboard