6 Things Your Credit Card Company Might Not Tell You

April 20, 2010, By Jeff Waddle 0 comments

No one wants to read the dreaded "fine print" but for credit cards, it’s a good idea. While banks and other issuers of credit cards love to tell you what a great deal you’re getting with a low interest rate and generous rewards program, there are many things they may not be so forthcoming with once you’ve signed on the dotted line.

So, continue reading the fine print because it can change, and keep an eye out for these issues your credit card company may not be telling you. It may help keep your interest rates from rising and your credit limits from falling.

They may be monitoring your purchases: With increasing default rates in the current economy, consumer advocates are warning that credit card companies have started monitoring purchase patterns as a way to determine risk. Charging cash advances frequently may be seen as risky, and even regular or large purchases of "vice" expenses such as lottery tickets, liquor or adult-related online content could increase your perceived risk and consequently, bump up your interest rate.

Late payments on other bills can raise your interest rates: You might find yourself paying a higher interest rate on your credit card even if you’ve never had a late payment or even pay it off every month. That’s because banks pay attention to your credit reports and overall credit scores. And, if your score dropped for some reason like you had a late payment or even contested a bill and therefore delayed paying it, it could increase your perceived risk and prompt a rise in interest rates. To avoid this situation, monitor your credit reports (you’re legally entitled to free reports every year) and pay your bills on time.

Terms can change quickly: Those low interest rates, lack of fees and other favorable terms you have enjoyed can be changed legally in as little as 45 days. All the company has to do is give you written notice. The 45-day period actually is a vast improvement over the previous 15-day period that changed when new rules about how card issuers can alter terms came into law in August. Due dates and even the way they calculate your interest still can change, however, so pay attention to everything your credit card company sends you. If you don’t understand something, call your issuer for clarification.

Debit cards may offer less protection: Since debit card transactions are deducted straight from your checking account, banks naturally have less incentive to protect you from disputed or unauthorized purchases vs. a credit card transaction where they are making an unsecured loan. Protection levels can vary by debit card, so make sure you know how you’re protected. If the fine print doesn’t detail it, call your issuer and ask.

You can negotiate: It may be tougher to get a credit card with good terms today, but it’s still a competitive environment and card companies want to keep good customers. So, contact your issuer if they’ve changed your interest rate or slapped you with a fee you think is unfair. Be prepared to haggle a bit, threaten to cancel your card or ask to speak with someone with more authority, but the effort might get you some relief. Document every conversation you have, including who you spoke to.

Lower credit limits can increase interest rates: With default rates growing, some card companies have been lowering credit limits for certain customers to reduce their risk. If you carry a balance and your credit limit is suddenly lowered, it could get your balance too close to the new limit which can flag you as a higher risk consumer. This, in turn, could even lower your credit score and that could adversely affect everything from your car and home insurance rates to interest rates and credit limits other card issuers offer you.

Jeff Waddle is a featured contributor to ManoftheHouse.com.