Credit Card Companies’ Evil Tricks

A couple of days ago, I read an article on MSN Money with the title “Credit card companies’ evil tricks.” The article is interesting because it reveals what the author, Liz Weston, considers as “foul play” between credit card companies and us, the card holders.

Here’s the summary from the article. For details, use the above link.

Mystery interest rates

  • Fair play: charging different customers different interest rates or offering different terms, based on their credit histories.
  • Foul play: not telling folks upfront what interest rates or terms they’ll get.
  • Your best move: Don’t hang on to a card you don’t want. Though closing cards can never help your FICO credit scores and may hurt them, the damage isn’t likely to be as serious with a newly issued card as it might be with one you’ve held for many years.

Slanted reports

  • Fair play: reporting your missteps to credit bureaus.
  • Foul play: reporting half-truths.
  • Your best moves: If your issuer isn’t properly listing your credit limits, you can request that they do so. If your issuer is Capital One, though, you’re out of luck. You can either charge up a big balance to reset your “highest balance charged” or switch to another card issuer.

Soaring rates

  • Fair play: raising your interest rate if you miss a payment.
  • Foul play: jacking up your rate if you’re a few days late.
  • Your best moves: Don’t carry credit card balances. Card issuers have far fewer ways to mess with you when you pay your balance in full every month.

Big fees

  • Fair play: charging late, over-limit and balance transfer fees.
  • Foul play: charging outrageous late, over-limit and balance transfer fees.
  • Your best moves: Clearly, you want to avoid late and over-limit fees whenever possible. Set up automatic payments so at least your minimum balance gets paid every month. Track your balances — which you can do online, via phone, by using personal-finance software like Microsoft Money or Quicken, or simply by writing down your purchases and keeping a running tally. You’ll do your credit scores a favor by keeping balances to no more than 30% of your limits.

A whole deck of cards

  • Fair play: issuing cards with low credit limits to riskier borrowers.
  • Foul play: issuing multiple cards with low limits to risky borrowers.
  • Your best move: Don’t max out your credit cards or charge more than you can pay off in full every month. Instead of accepting a new card, ask for a higher credit limit on the one you have.

Paying twice

  • Fair play: charging interest on balance transfers.
  • Foul play: charging interest before the check clears.
  • Your best moves: Is this a huge deal for a consumer? Probably not. Even with big transfers — say, $10,000 or more — we’re still talking about only a few bucks a day and a total cost that’s less than most late fees. But it’s annoying nonetheless. Clearly, you want to try to press for an electronic transfer whenever possible.

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