Read the Fine Print Before You Apply For The Credit Card Offers in Your Mailbox
When it comes to promotions, some credit card companies tend to forget the meaning of business moral. They use every trick they can think of to convince you to fill out the application and send it in right away. The more cards, the merrier - apply now - don't miss out.
They say you are pre-approved and that you are special and important. In the past few years it was not unusual for someone with decent credit to get a dozen of these applications every week in their mailbox.
Promotions = Higher Profit
Face the facts, credit cards have been a high profit business for many years. Big business is always looking for higher profit and pushing the credit card industry to the limit became the goal.
It wasn't good enough to have one card; it wasn't enough to have two cards. New selling points, rewards and bonuses were offered and you could even choose the design of your credit card.
The marketing campaigns were fiercely competitive and consumers loved the designer cards and enjoyed having big companies compete for their business. Only when the economy took a downturn did many of us realize the tricks those companies had played.
That great introductory rate of 9% was good for six months. We didn't notice the little tiny part that said where the rate would go higher after the six months were up. Many of us were shocked when the bill showed our new interest rate as 21%.
Why didn't we expect the rate to increase so drastically? Because many people assume the interest charged on credit cards goes up and down just as the interest on bank loans and mortgages do.
Credit issuers seem to pull interest rates from their hats. Often those rates are contrary to market rate conditions and the credit issuers like it that way.
Be Careful With Your New Credit CardAs a consumer with a new credit card, you need to be smart and careful. Just because something makes sense doesn't mean it will apply to your credit account. In fact, the opposite is often true. Predatory lending has been on the rise for several years.
Even the most respected bank and financial institutions participated in predatory practices. Interest rates were raised with little warning and the warnings were almost unreadable.
Terms were changed and credit lines raised without consumer requests. If you were late paying one credit card you could find all of your credit accounts had doubled or tripled in interest.
This doesn't mean having a credit card is a bad idea. In fact, having a positive credit is important in our society and you can't create a credit file without creating and paying off some debt.
However, the days when you could trust the terms have been over for some time. In other words, make sure to always to pay attention to your account and read your statement carefully when it arrives.
Donating a Portion of Your Fees
I want you to keep in mind that not all of the credit card tricks are harmful. Cards dedicated to the Humane Society, World Wildlife Federation and Audubon Society donates a portion of your fees and payments to that cause.
The cards carry the logos of these causes and identify you as someone who cares about the issue. Using a card that promotes your favorite charity is one credit card trick that may appeal to you.