Do you know how much the credit industry makes per year and; more importantly, how they make this money? The answers may surprise you, unless you're one of the few people who actually can understand the fine print. The banks and card-issuers take in early $170 billion before expenses, three-quarters of which comes from the steadily-rising interest rates they charge us for not paying off the credit each month. In short, if everybody paid their credit-bills on time, the industry couldn't subsist on the remaining billions of dollars, a sizable fraction coming from the late fees and overdraft charges so many of us incur.
While the above charges are understandable - and even acceptable, as the cost of doing business - there are a few other credit-card practices that should leave you indignant. Did you know that...
1 - If you bank at the same place from which you got your credit card, and you end up defaulting on your credit balance at some point, the bank can possibly extract money from your account to pay off the presumably unrelated credit-card balance (presumably as in, you didn't sign up for that option). Usually their claim to be able to do this is in the legal mumbo-jumbo fine print that requires a magnifying glass and a law degree to decipher, so your best bet is simply to be mindful: call the bank and ask the representative direct questions. You don't ever want to give them this ability, so beware.
2 - This one I like to call the "Grace-period change-up", in reference to my favorite sport, baseball. The worst part of the change-up is the reasoning behind it; or, rather, what it seems the credit card company is trying to accomplish by doing it. If you have say 29 days to pay off your credit card bill before interest is applied, and you've been consistently paying off all your balances on time, some credit companies will change the grace period from 29 suddenly to 25, often before you are aware of it. The devious thing is that this never/rarely happens to people who consistently pay interest by carrying their balance month-to-month. It's almost like the credit companies are trying to trip you up. No; it's exactly like they're trying to trip you up! You've been a responsible customer (and thus, a bad customer) and aren't gaining the company any money. With this one, you must call and demand that they return the grace period to its previous figure - trust me, it works. You could also just avoid the companies that engage in this practice.
Taking Control of the Reigns
Navigating the credit card industry can be time consuming for most of us, as we have working lives unrelated to it. Thankfully, there are just a few overarching rules about which to be mindful, and the rest of the stuff will more or less fall into place. Never hesitate to pursue any nagging questions by directly calling a bank representative; being informed is absolutely the best way to go to take control of your finances.
While the above charges are understandable - and even acceptable, as the cost of doing business - there are a few other credit-card practices that should leave you indignant. Did you know that...
1 - If you bank at the same place from which you got your credit card, and you end up defaulting on your credit balance at some point, the bank can possibly extract money from your account to pay off the presumably unrelated credit-card balance (presumably as in, you didn't sign up for that option). Usually their claim to be able to do this is in the legal mumbo-jumbo fine print that requires a magnifying glass and a law degree to decipher, so your best bet is simply to be mindful: call the bank and ask the representative direct questions. You don't ever want to give them this ability, so beware.
2 - This one I like to call the "Grace-period change-up", in reference to my favorite sport, baseball. The worst part of the change-up is the reasoning behind it; or, rather, what it seems the credit card company is trying to accomplish by doing it. If you have say 29 days to pay off your credit card bill before interest is applied, and you've been consistently paying off all your balances on time, some credit companies will change the grace period from 29 suddenly to 25, often before you are aware of it. The devious thing is that this never/rarely happens to people who consistently pay interest by carrying their balance month-to-month. It's almost like the credit companies are trying to trip you up. No; it's exactly like they're trying to trip you up! You've been a responsible customer (and thus, a bad customer) and aren't gaining the company any money. With this one, you must call and demand that they return the grace period to its previous figure - trust me, it works. You could also just avoid the companies that engage in this practice.
Taking Control of the Reigns
Navigating the credit card industry can be time consuming for most of us, as we have working lives unrelated to it. Thankfully, there are just a few overarching rules about which to be mindful, and the rest of the stuff will more or less fall into place. Never hesitate to pursue any nagging questions by directly calling a bank representative; being informed is absolutely the best way to go to take control of your finances.
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