Beware of the Credit Card Game

All of us know right from wrong. It is a lesson that was taught to us at an early age. This lesson continues to be strengthened, as we grow older. By the time we reach adulthood, we all know what is just and what is not. The question is this, do credit card companies know the difference. Companies have justifiable and questionable practices. Let’s look at the things they do right and things that are questionable.

Variable Interest Rates

It is shared for companies to give individuals different rates. If you have a high credit score when applying for an account, you will generally receive a lower interest rate when approved. There is nothing wrong with this. People who have worked hard to continue a high credit rating should be rewarded. The problem is that consumers will often not know what rate they will get until they receive the actual card in the mail. They are not told up front what the rate will be so they do not have the option to decline the account if they do not find the rate to be satisfactory. The only option they have is to close the account, which can lower their credit score.

Raising Rates

Most credit card companies can raise your rate whenever they want. Having a fixed rate does not average that it can never change. If you miss a payment on your credit card, the first thing that happens is the rate will go up. This is a justifiable move by the companies since the agreed upon payments were not made. However, is it justifiable to raise the rate if the payment was late? If it was three weeks late, maybe. However, what if the payment was two hours late? In the company’s eyes, late is late, in spite of of how late it is. Once the rate goes up you may not be able to have it lowered, already if you have never been late in the past and are not late again in the future.

Fees

We have all heard the horror stories of over limit and late fees. You probably know someone who went over their limit by a dollar and was then charged $40 dollars for making that mistake. People should be responsible for keeping track of their debts. They should know if they are nearing their credit limit and they should know when there payment is due. However, if a sale takes a person over their limit, shouldn’t the sale be declined? In many situations, it isn’t, and the account will then accrue additional fees that take it farther past the credit limit. The cardholder may then have trouble getting the balance back under the limit, which can cause the balance to continue to grow already if you are making payments each month.

Credit Bureau Reporting

If you miss a payment on your credit card or go over your credit limit, credit card companies are quick to report the information to the credit reporting agencies. This will cause your score to fall. However, do all creditors report the good things that you do? It’s not uncommon for creditors to skip the reporting of credit limits, which can make it look like you have maxed out accounts. They also will not always report that you have paid items in complete or that you have made your payments as agreed. already though this may not hurt your credit score, it is not going to do it any favors. The good news is that you as a consumer have the ability to argument information with the credit reporting agencies. They are required to probe any argument free of charge. Be sure to read the Fair Credit Reporting Act (FCRA) to review all of your rights.

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