The Tactics Of Credit Card Companies

The tactics of credit card companies are bankrupting America. The vast majority of Americans own and use credit cards and, sadly, many survive on credit cards. Some use them to pay bills, normal household bills like utility and phone bills. Each time the card is charged, interest is added, which means not only do you have to pay back the amount charged, but, also, the interest charged on that amount.

Through the years, the credit card companies' greed has led them to come up with ideas over and over to make more money, anything to boost profits. For instance, they have instituted fee, after fee, after fee. One such fee is an over-the-limit fee. This fee ranges anywhere from $35.00 to $50.00. If you charge your card even $1.00 over the credit limit they provide you, they will charge this over-the-limit fee. There is a late payment fee charged, if you are late with your payment to them. This fee also ranges somewhere up to $50.00. They consider a payment late, even if it's one day past the due date.

Currently, a 25% APR is becoming more and more common on credit cards. They devised a way to raise a person's interest rate for any frivolous reason. Even though your payment history with them is perfect, they will raise your interest rate according to your credit score. If that score declines or if you are late paying some other creditor, they justify this as a reason to raise your interest rate. This is called 'universal default'.

The minimum monthly payment is calculated at around 2% of the unpaid balance or 1/50th of what you owe. At that rate, it will take up to fifteen years to pay off the card, even with no new charges being added. This is designed to keep you in constant debt.

Congress has been asked to require credit card companies to include in their monthly statements a calculation of how many months it will take to pay off the balance by paying the minimum monthly payment. The Federal Reserve claims this would be difficult to do - it would involve too much expense in calculating. Many consumers are not aware of the true cost of their credit card debt, so by including this information on their monthly statements, this would give them an idea of how many years they will be paying off this debt. This misinformation can be blamed for the explosion of credit card debt over the past 25 years.

The offers for a promised 'fixed' or 'low' rate can be deceptive. The companies advertise through television, mail solicitations and telemarketing phone calls that they will give you a credit card with a low, fixed interest rate that will never increase. However, reading in the fine print of the contract, it states these low, fixed rates can change within 15 days notice.

As of 1998, around ¾ of American families had at least one credit card or more. This is a 50% increase from 1970. The increase in credit card debt has to be associated with the fact that wage increases have been sluggish during this period of time. In many instances, people use credit cards for this reason - their income has not kept up with the rising costs of living.

The attractive thing about credit cards is you can have what you want today and pay for it later. This idea can be enticing, but always remember you are going to have to pay for it sometime, plus pay the accumulated interest on that amount.