What Credit Card Companies Don’t Want You To Know
In 2015, a NerdWallet study revealed that the average American had $16,000 in credit card debt. Many try desperately to climb out of the debt hole, only to be sucked back in. While some responsibility must be taken for personal spending decisions, credit card company policies are also holding many people back from wiping out their debts. Read on for a few dirty secrets the credit card companies don’t want you to know.
Minimum Payments Are Not Going to Help You
Sure, they may be billed as a convenient way to make large purchases with little cash, but minimum payments should not be viewed as a consumer convenience. These amounts, which are not regulated by law, are often geared to force a consumer into paying off a debt for 15 years or more.
One Late Payment Can Double Your APR
If you read the fine print, you’ll see that most credit card companies include a “penalty APR” in your contract. If you make even one late payment, your interest rate could shoot up to as much as 30 percent, even if you’ve paid on time for years.
There is No Legal Limit On Interest Rates
Not only can credit card companies introduce skyrocketing APRs for late payments, there is no legal limit on just how high those rates can go. These days, it’s not unusual to see rates pushing the 35 percent mark, making Americans with vulnerable budgets even more at-risk for default.
Luckily, there is good news, too. Since competition is growing amongst credit card issuers, you can often speak with customer service to amend terms you don’t like simply by making a polite request.
Image via Flickr/carlosenriquepachas