Saturday 16th of January 2021

The More You Know: How Credit Card Companies Get Your Money

These days you’d be hard pressed to find someone you know who doesn’t have a single credit card. They’ve become a staple in our wallets and purses, convenience and freedom just a swipe away. Some people use them for every single transaction, hoping to rack up rewards points or frequent flyer miles. However, it all comes at a cost and credit card companies are all too happy to collect it. Over the years, issuing companies have found more and more ways to get your money through dozens of questionable charges, some that seem outright deceitful. Here are some of the common tricks you should be careful of.

Common Tricks to Consider

  • What’s the most common fee companies charge? Without a doubt it’s the dreaded and infamous late fee. The average late fee is about $30, but they can reach as high as $39. Also keep in mind that a single late charge can also a trigger an increase in your interest rate.
  • Your credit cards all have a balance limit, ranging from several hundred to thousands of dollars, so what happens if you go over that limit? For most companies, that’s grounds for a $25-$39 fee. This over-limit fee can even be triggered by another fee, such as a $39 late fee that pushes your balance over the limit.
  • One newer trick companies have introduced involves those great balance transfer offers you’ve probably been hearing about. While you may get a 0% introductory rate on your balance transfer, you’ll probably be paying 3%-5% transfer fee on your balance.
  • You’d think you could avoid all these tricky charges by not using your  card, but that can actually cost you as well. Some companies will hit you with an inactivity charge if you don’t make any transactions on your card for several months.
  • Let’s say you’re a couple days late on your Discover card, you’ve already come to terms with the fact you’ll get a late charge and possibly a rate hike, but it doesn’t always stop there. Some issuers have universal default penalties, meaning they can increase your interest rate if they find out you made a late payment on a different card.
  • We all get offers in the mail, usually by the dozen, and sometimes those offers don’t seem too bad. In fact, some of the offers sound like a downright steal, and that’s because they often are. While you may receive advertisements for a company’s premium interest rates, you won’t necessarily get approved for that rate.