If you think that the recent introduction of regulations for credit card companies has made your job easier to navigate on the market, you might be up for a surprise. While you will be told about the basic rates of credit cards and the fees, there are a few things about deals your company is trying to keep quiet about. To avoid getting into debt without knowing the full terms and conditions, read the below list of facts you must know before you make an application.
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1. Fixed Rates
You might read in the description of your credit card deal that the rate is fixed. However, in the terms and conditions there is usually a clause that states that if the base interest rate rises, or your circumstances change, your company has the right to increase your rate. This increases your risk of getting into debt and your credit card account getting out of control. While you will be notified when your credit card rate increases, once you have a balance, there is little you can do about it.
2. Double Penalties
If you get a late payment, you will expect a penalty. However, you will often get double. Your credit card company might decide to cut you off the zero percent deal and issue a penalty fee. This will increase your balance, interest rate, and monthly repayments significantly. While you cannot read the long pages of the terms and conditions word for word all the time, you can ask your advisor directly about late penalties and how they affect your credit rating.
3. Raising or Lowering Your Limits
You might be encouraged to spend more by your credit card company that will increase your credit limit. Knowing that you have more money to play with, you will be less focused on paying off your debt. Make sure that you keep an eye on your limit and set it at an affordable level. In other cases, if you have a late payment, your creditor might decrease your limit, immediately making you go over your limit and incurring charges. Check the simple terms and conditions before you sign the dotted line.
4. Increased APR after Late Payments
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If you want to be sure how much you pay each month, a credit card deal might not be for you. If you pay late, your company might keep on increasing your interest rate until it is no longer affordable. If this happens, it might be time to say goodbye to your credit card company and contact credit card consolidation companies to restore some order.
Sometimes your credit card company might reduce the grace period of making the first payment, which will result in late fees. Make sure that you know your payment dates and check that you have enough money in your account, or you will increase your debt by up to a hundred dollars for a few days’ of lateness.
When dealing with credit card companies, make sure you consider the above practices and check the small print to avoid your debt spiraling out of control.