Questionable credit card practices bring a high rate of return to banks and credit unions that issue them – at considerable expense to cardholders.
CHANGES IN THE FINE PRINT
Credit card companies thrive on making big changes in small print, especially interest rate increases. Be vigilant in reviewing both the terms and conditions of your card and the actual charges on each monthly statement.
Credit card companies are notorious for raising interest rates for the slightest reason. The Credit CARD Act of 2021 prevents issuers from raising rates on existing credit balances unless they are 60 days past due, but some companies continue to use “hair-trigger” penalty rates on new balances.
FEES. MORE FEES.
Credit card companies have no limit on how much they can charge customers. In addition to cash advance and balance transfer fees, card companies are adding inactivity fees, statement fees, foreign currency fees and other miscellaneous surcharges.
PRESSURE TO “OPT-IN” AND ACCEPT MORE FEES.
The Credit CARD Act stops credit card issuers from charging fees when you go over your credit limit unless you specifically “opt-in” to authorize the company to cover over-the-limit charges—which also means accepting related penalty fees. Some companies have begun to make deceptive calls pressuring customers to opt-in. Do NOT opt-in, and consider whether you want to keep your account with a company that employs this tactic.
NO OPTION FOR JUSTICE IN COURT
“Mandatory arbitration” is one of the many clauses that credit card companies typically insert in the fine print. In simple terms this means that if you have a valid complaint with your credit card company, you won’t be allowed to take action through a court of law. Instead, companies require their customers to pursue complaints through an arbitrator—a process that is more likely to favor the company.
USELESS ADD-ON PRODUCTS
Issuers may try to sell “credit protection,” identity theft protection or other similar products. Often prices are quotes in terms of pennies per $100 to make the price seem low. In fact, paying the amount monthly coupled with a credit balance can be expensive—especially if the product is essentially worthless. Also, be careful about signing up for a free trial period. It’s easy to forget to cancel when the period expires, and that’s exactly what the card companies are counting on.