Editor’s note: This is a guest post from Evan Fischer
Credit card companies are notorious for their fine print, which can often leave you paying outrageous interest rates and fees that you haven’t anticipated. Sure, they’ll promise you the moon with low introductory rates and rewards programs, but when push comes to shove they’re looking to take your money in any way they can. This means interest hikes and fees for everything from overages to late or missed payments to black mark on your credit report (that have nothing to do with your credit card account). Here are a few things your creditors don’t want you to know.
1. The CARD Act protects you. The Credit Card Accountability Responsibility and Disclosure Act is aimed at protecting consumers from some of the unfair practices that creditors have used in the past. According to this act, creditors must inform you of any changes to your account a minimum of 45 days prior to implementing the changes. Further, changes can be applied only to future charges (not retroactively). Don’t let them tell you any different.
2. Rates may change based on your credit score. If you fail to pay a creditor and it results in a black mark on your credit report, other credit card companies may try to raise your rates. Although they have to inform you of this change, most people simply don’t realize that this is even a possibility.
3. You can say no to changes. Many people don’t realize that signing up with a credit card company constitutes making a contract. Because of this, the company needs your consent to make changes to your account. You absolutely have the right to say no if your creditor tells you that your rates are going up for reasons not covered by your contract (although they have the right to raise rates or charge fees for items listed in the fine print). Of course, they also have the right to terminate your account, but at least you won’t be on the hook for a higher rate.
4. You’re at risk for identity theft. Your creditors will never tell you this; they want you to believe that they’re the only ones that can guarantee protected service. Unfortunately, any credit card you open is at risk. You can do a lot to protect yourself, of course, but if your identity is stolen, you want to know that you can count on your creditor to reimburse the charges. So make sure to ask about any fees associated with clearing up such an issue (most companies have them but often opt to waive them) and make sure that they’ll never send you emails or cold-call to request personal information.
5. You can get cards to improve your credit. Although few companies advertise for adverse credit cards with no annual fee, many creditors offer these cards for people looking to improve their credit score. Of course, they’d rather have you racking up interest charges (that’s how they make the lion’s share of their money, after all). But if you’re a bad credit risk, they probably won’t offer you a card at all. However, if you ask for a card with a balance that must be paid monthly in full as a method of proving that you are willing and able to take on credit again, many companies will help you in the hopes of securing later business from you.
About the Author: Evan Fischer is a freelance writer and part-time student at California Lutheran University in Thousand Oaks, California.
Knowledge base resource: The Skinny on Credit Cards: How to Master the Credit Card Game