I Don T Mean Late Just To The Credit Card But To ANYBODY

Category: Finance, Credit.

Do you know about credit cards and their dirty little secrets?

Take the quiz and see how much you do or don t know about universal default, and other credit card issues. I make my living knowing about them and I was unable to answer all the questions at a great quiz from the PBS Frontline program Secret History of The Credit Card at Credit Card Quiz. Then read this article for more dirty little secrets this great PBS special offered. I don t mean late just to the credit card but to ANYBODY! Here are a few appetizers: UNIVERSAL DEFAULT- did you know the credit card company can raise your interest rate if you are late on ANY payment? Be late on your phone bill, house, car. Or if in the eyes of a creditor you simply have to much outstanding credit, all bets are off regardless of whatever interest rate you signed up for.

ANYTHING. The logic is simple. Therefore, it is not unreasonable to raise rates if it has reason to think risk of being repaid has changed. The industry believes it is within its rights to protect its interest in a more risky unsecured loan venture. And as a lender, the creditor has every right to view your credit file any time it wants. all of your file and not just its own payment history. No problem, right? MINIMUM NOTICE CHANGES- If the above is not bad enough, consider the consumer with on time payments every month on everything.

WRONG! They can change their mind AFTER you make a purchase at 5% (for example) and any former agreements are null and void. Buried within the contract( that contract law attorneys admit they have great difficulty interpreting) , is a clause that allows the company to change your interest rate" at any time, as long as, for any reason the holder is given 15 days notice. " That s right. How can a purchase price be changed after the sale? USURY OR NOT- According to Frontline, "There is no federal limit on the interest rate a credit card company can charge. " In fact an interest rate of 35% is not unheard of. No other industry can do this but the credit card company.

This is because in the 1980s South Dakota and Delaware eliminated the cap on usury laws which is what constitutes the maximum allowable interest to be charged. Chances are it is Delaware or South Dakota. Have you ever noticed the return address on your credit card statement? Gee, I wonder why. This is not true in the upside down credit industry. DEADBEATS and REVOLVERS- Deadbeat use to mean someone not taking responsible action.

In credit card bill jargon, "Deadbeats" pay their balances off in full every month. On the other hand, "Revolvers" roll credit card balances over month to month and never pay in full. They are deadbeats because the industry receives very little profit off of these responsible consumers. This is the ideal customer because of the profit generated. FEES- Again quoting Frontline, "In 1996, the U. Then there are" Rate Surfers" or" Gamers" who shift usage between credit cards based upon interest rates.

Citibank lifted the existing restrictions on late penalty fees. Supreme Court in Smiley vs. This means simply, there is no limit on the amount a credit card company can charge a cardholder for being even an hour late with a payment. " But this has opened a Pandora s box for not only late fees, but over the limit fees and bad check fees as well. Now the consumer not only must contend with a higher rate, but late fees as well. A lawyer who worked on the Smiley case says he believes penalty fees which use to be$ 5 or$ 10 could rise to$ 50 in another year. Additionally what if these fees put them over the limit creating still another fee. MINIMUM PAYMENT- Consumers use to be required to pay 5% of the outstanding balance.

It is a never ending spiral towards bankruptcy. But slick credit card marketers suggested implementing a 2% required minimum payment. Unfortunately even banning college campus credit solicitation and simple disclosure on billing statements go down in defeat because of a very powerful credit lobby groups. This was advertised as consumer friendly with" easy low payments. " The truth is, the tactic allowed consumers to increase their debt because of the lower payment which in turn created more profit through higher debt over a longer time period. ________________________________________________________________ Selected Senators and Congressman as well as other consumer credit advocates have tried fruitlessly to pass legislation to overcome some of these deficiencies. Let your congress know how you would feel about a simple statement beneath the the amount of minimum payment stating something like, "With a minimum payment, your current debt will take xxx years to pay off and the cost to you in interest will be$ xxx. " Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini- course via e- mail. You can enroll at Debt Free In 5 Years.