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8 dirty tricks your credit card company can play

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8 dirty tricks your credit card company can play
Credit cards enjoy a discreet association. At least that is the general perception. This article was written to change your perception.

It has been my belief, and may become yours after you read these 8 tricks, credit card issuers should be classified "dirty". They have only one purpose and that purpose is to mint money from every consumer using their cards as the tool.

To start with, I am not anti credit card. I have six credit cards in my wallet and use three of them regularly. I sure do apply the anti-dote every month to their poisonous bites. But, I am ahead of myself and will give you the anti-dote at the end of this article.

In this article I have covered what I classify as the top 7 obscene, dirty ways credit card issuers relieve you of money that should rightfully stay in your wallet. I cover them all in a book I wrote which is in my bio at the end of this article.

1. Universal default penalty: As you may already be aware, credit card issuers regularly check your credit report for late payments on any of your bills. Even though you have been paying your credit card bill on time each month and have never been late, you still can see a spike in your interest rate because you were late with, for example, your car payment.

UPD clause:The UDP clause permits your credit card issuer to raise your rate no matter in what account you were late. This clause is found in a document called Terms and Agreement which was given to you when the card was issued.

You didn't read it. I know you didn't because the font is about 3.0 in. size and it is written in legalese. You tossed it away or put it in your file cabinet or desk drawer.

This does not give them the right to take you to the cleaners but they know you won't read it so they take you to the cleaners. All of it legal by the way because the legislation is written for them and not for the consumer.

The proof of my contention is found in your Terms and Agreement and in the credit card laws. Take the time to read one or the other and you will use stronger language than obscene or tricks when you talk about credit card issuers.

2. Limit fee: If you charge over your credit limit, you are penalized a sum of money. This is called as limit fee. The limit fee for credit cards is between $25 and $50, depending on your credit card issuer.

Think about this charge for a minute. Who sets your limit? The credit card issuer company. You didn't. So, if you have a $1000 limit, how can you over charge given their computer is preset with that amount and is supposed to block any more charges once you hit $1500?

Since the credit card issuer has imposed the limit, how can they charge you a fee for exceeding the limit? If you exceed the limit, they had to grant permission, right? If they granted permission, than they just reset your limit to a higher amount. So, if they reset your limit to a higher amount, you can't be over your limit, can you?

You are wrong again! Read the Terms and Agreement carefully. They have a little clause permitting them to do exactly what was just described in the previous section without penalty to them but with a penalty to you.

I don't know about you, but to me this seems like a punch below the belt.

3. Special delinquency rate: If you have a credit card with a very low interest rate, you may experience a rapid rise in that interest rate if you are late a certain number of times in any specified time period. One particular huge credit card issuer that I am aware of has set the number of times to one. Ouch!!!

4. Transaction fee: A transaction is nothing more than an action (charging a shirt for example). The transaction happens between you and the merchant. This results in an activity on your card. What else could it possibly do?

Well, since the transaction resulted in an activity, a transaction fee is imposed. But isn't that what the card is set up to do in the first place? The answer is yes but the transaction fee increases the profits of the credit card issuer so its inherent action (an activity) gives rise to a fee!

5.Maintenance fee: You don't even have to use your credit card and you will be charged. You guessed it correct. The maintenance fee rears its ugly head. I call this a privilege tax because the credit card company is charging you just because you have their credit card.

6. Service charge: Service charge is a fee for specific services or imposed as a penalty for not meeting certain requirements. For example, applying for a credit card is considered a service, so a service charge is applied!

7. Inactivity charge: An inactivity charge is imposed if you haven't used your credit card for a certain period. For example, let's assume a six month period. You will have to pay an inactivity charge if you do not use your credit card during that six month period.

8. Two-cycle billing trick: Another onerous trick is the two-cycle billing trick. Most of us have cards that bill customers on a one month basis, i.e., charge today and payment is due next month.

Two-cycle billing uses your two previous month's balances. The fuzzy math varies a little bit by credit card issuer so rather than give one across the board example, I'll advise pulling out your Terms and Agreement. By law, this particular deviousness must be explained in explicit detail in the agreement.

For some reason if you cannot understand their terminology, math or anything else in that section, ask your banker for an explanation. Most of the credit card companies do have a 1 800 number you can call for information.

OK, now that you are well aware of the eight time bombs your credit card issuer has placed in your wallet, you are armed to take action. When I first opened this article, I said I would give you the anti-dote to their poisonous ways.

I pay the balance in full , a.k.a anti-dote, on every credit card I placed a charge by the due date shown on that credit card's statement. The Terms and Agreement does do one good thing for the customers. It says if the customers pay in full by the stated due date, we will not face any of the myriad charges and fees.

It is that simple. I keep a close watch on how much I charge and I pay the balance in full no matter how financially painful it seems at the time. Infact I peek in my accounts once a week on the internet so I am better aware of my spending.

As a famous commentator used to say, End of story.

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