Nationally known credit card companies may seem like upstanding establishments, but they are not above trying tricks to squeeze money out of their customers. These big companies are so good at these tricks that they usually don't get caught, so their solid reputations remain intact. There are many ways they can get extra money from unsuspecting customers.
If a person has a great rating, they do not have to worry about the interest rate a card company will give them. If your credit rating is less than perfect you have to look out. Big credit card companies are often unclear about their interest rates, giving customers a range of possible rates. The rate you end up getting may be under 10% or it may be over 20%. There is no way of knowing where you will fall in this range because the credit card company doesn't want you to know until it's too late. This is how they hide outlandish interest rates.
It is hard to always pay your bills on time, and late payments can happen to normally very reliable and trustworthy people. If a person is consistently late in their credit card payments, the company is right in raising their interest rates. But some of the big credit card companies are too severe in their policies. Often a bill that is paid only a few days late will be met with a dramatic rate increase, regardless of a history of on-time payments. There is a difference between slightly late payments and payments that are skipped entirely. Some card companies benefit by ignoring the difference and raising rates for any delay in payment, no matter how small. According to a NYTimes.com article:
"Credit card companies offered customers misleadingly low rates, then used deceptive practices and hidden fees to make actual costs much higher. The 2009 Credit Card reform act prohibited tricks and traps like exorbitant late fees, deceptive payment allocations and arbitrary interest-rate hikes on existing balances."
They keywords above are "on existing balances." What about those who have come later? And how do these companies actually do this?
For a person with shaky credit, a big credit company can issue a card with a very low spending limit, often below $1000. This prevents the individual from spending too much and getting into trouble. But sometimes the company will let the person with a shaky credit history borrow multiple low-limit cards. So now, the person who has trouble keeping up with bills is tangled in a web of multiple bills to be paid on different days. The credit card company benefits from this confusion, and will watch the person dig himself into a hole. The only way out of the hole is by paying through the nose.
While there are alternatives in the world of credit cards, many people have limited choices when it comes to choosing which plastic currency to go with. Just because the name of a big credit card company is familiar, do not assume that they will treat you fairly. They are out there playing hardball and the customers don't have a glove. Even if a customer has a legitimate complaint, he and his problems, are just too small for them to care.
Mark Baldwin is a freelance writer and market analyst. He has been a contributor for many websites such as http://www.moneyonthegoreview.com/.
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