If you are like the majority of people in the world today, you probably use your credit card quite a bit for your daily purchases. You probably know some pretty important information about your card like your interest rate, if you have rewards, what your balance is and how high your credit limit is. However, you should realize that there are a few secrets credit card companies don’t really want you to know about your card. Let’s explore these a little bit further.
- Your interest rate can change. Even though many companies may say you have a fixed APR, this isn’t always the case. They do let you know about this when you sign up; it’s usually in the fine print. You have the right to be told if your interest rate is going to change within 15 days of it happening, but you should always make sure that you pay attention.
- You might be penalized twice. If you make a late payment to your credit card, you are most likely expecting to get hit with a late fee. However, one of the secrets credit card companies like to keep quiet is that you might also get a penalty rate which means that they can raise your interest rate if you make a late payment.
- You might have to pay double interest. Even if you pay your balance in full one month, if you make a partial payment the next month, you can be charged twice the amount of interest. This method is referred to as double cycle billing and it is done when they consider your average daily balance within a two month period and charge more interest based on the higher balance.
- Your grace period may not be what you think it is. Traditionally, credit cards have offered a grace period of 25 days before interest is charged to your account. However one of the secrets credit card companies have kept quiet is that this has changed a lot. Some cards now have a shorter period and others have none at all before you will find that interest has been added to your balance.
- Credit card limits might be hidden. Many times you will get a card that has been advertised as not having any credit limit imposed on it. Another secret credit card companies don’t want you to know is that you might find out after spending one month that you have exceeded the limit that you didn’t know that you had. This is because there is a limit on it based on your monthly spending habits and behaviors. Before you sign off on a card that says it is limit free make sure that you asked the issuer if there is a predetermined limit on it.
- Minimum payments can increase your debt. In previous years, credit card companies required a minimum payment every month of 5 percent of the balance on your account. However, in a secret credit cardcompanies want to keep quiet, they began to notice that consumers paid off their balance in full too early and that reduced the amount of interest that could be charged. Once this was taken into account, the credit card companies lowered the monthly payment amount to 2 percent. This makes it more likely that you will gather more interest every month and start a cycle of paying a lot more off than you originally thought that you would.
- Any late payments can raise your interest rate. This doesn’t just mean late payments to your credit card holder; it means any late payments at all, whether it is your car loan or your mortgage. One of the secrets credit cardcompanies don’t share with the public at large is that once they see these late payments they will use this to raise your APR because they can then classify you as someone that poses a risk of nonpayment or late payment. The only way to avoid this situation is to make sure that all of your bills are paid on time and in full every month.
While you might know a lot about your credit card, we hope that the information in this article opened you up to some of the secrets credit card companies don’t want to tell you. As long as you are careful with your credit and make your payment at the right time each month, they shouldn’t affect you too much. However, it is still best to be aware of everything that can be hidden in the fine print since the average person doesn’t usually get that in depth when they are making a decision about applying for a new credit card. Even if you are someone that prides yourself in looking through your paperwork, things can still slip through the cracks, so always beware of these pitfalls.