|
 |
|
Myths about Credit Card Interest Rates |
|
Sometimes consumers often think that they have a fixed-rate credit card that is protected from the swings and arrows of outrageous rates. In reality, there is no such things as a “fixed’ rate. Regardless of how iron-clad your rate is, the credit card company can wriggle out of it, thanks to the fine print in the application one signed or those little brochures that they had sent in the mail after one got the card.
Normally, 15 days notice is what the card companies give’s before they change the rate, terms, or conditions on one’s account. Certain behaviors in one’s account can trigger a spike in the interests and the change can happen overnight. The average “punitive” rate jump is 8% and it can go up to a maximum of 29.99%.
Here are a few reasons why the rates spiral up:
- Making a late payment on the card: This means that the card company should have received the payment before the due date as it has stipulated. Many cards have due “times” in addition to due “dates”. In order to avoid late payment, one has to send in payment well in advance, say a week, so that it reaches before the due date.
- Making late payment on any other card or loan: Credit card companies regularly cruise one’s credit reports looking for signs of mismanagement and to see if there are any red flags. If they see irregularities, they hike the interest rates of the card. More than half of all credit cards now have such “universal default” penalties.
- Making only minimum payment: When the credit card companies find that one is making minimum payments, they have figured it out that it is often a sign someone is about to default and therefore they spike the rates as it is means profit for them.
- Max out on one or more cards: This is again a sign that someone is overstretched and possibility of defaulting.
- Apply for another card or loan: The card company may realize that one has too much credit available and jack-up the rates to compensate.
Knowing all the facts about credit card helps to manage one’s finances better. If you or someone you know is in a debt problem, contact debtfreeafterall.com and they can help resolve your debts by enrolling in one of their debt settlement, debt reduction, debt negotiation, or debt consolidation programs.
Written by Naz
|
|
|
|
|
|
|
