Did you know that the average American has approximately $16,000 in credit card debt? If you’re in this boat, you know how difficult it can be to climb out of this debt hole. Unfortunately, many people make a bit of progress 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 three things credit card companies don’t want you to know.
A Single Late Payment Can Double Your APR
This is a rather terrifying prospect, yet it’s true. If you read the fine print of your credit card agreement, 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 increase by as much as 30 percent, even if you’re a long-term customer and you have 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.
Minimum Payments Won’t Really Help You
Most people with credit card debt pay close attention to making their minimum payment, but often not much more. This is unfortunate because minimum payments are billed as a convenient way to make large purchases with little cash, but they should not be viewed as a consumer convenience. These amounts, which are not regulated by law, are often geared to “trick” a consumer into paying off a debt for 15 years or more.
While the above information is troubling, 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. So, when in doubt, just ask!
Image via Flickr/Don Sniegowski
