Credit card

7 little-known facts about your credit card

You’ve memorized your favorite credit card interest rate, credit limit, and its benefits. You use it strategically to make the most of the rewards it offers. Think you know everything about your favorite credit card?

Not necessarily.

Even if you’ve been carrying the card for a long time, it might have a few surprises in store for you. Card issuers and the government continue to change card rules. Interest rates and credit limits may go up or down depending on your situation or that of the card issuer. And then there are those unusual details that you might have missed.

Here are seven credit card facts you probably didn’t know.

Little Known Facts About Credit Cards

  1. The interest on your credit card may change.
  2. You can say “no” to a change of interest.
  3. Your credit card can protect your purchases.
  4. Your card may be refused abroad.
  5. Card balances can be tricky.
  6. Late payments have an impact.
  7. Credit card issuers might pay to keep you.

Fact # 1: The interest on your credit card can change.

You’ve taken out a great credit card and you’re excited about the low APR you have.

But here’s a scary, little-known fact: Many card issuers can raise interest rates as high as they want.

The top 10 credit card issuing banks are federally chartered banks and do not have to follow state laws limiting interest rates, meaning they are free to set rates as high as they like. wish.

Your interest rate is only protected for the first year of the card (or the first six months, if it is a teaser rate), under the Liability, Disclosure and Liability Act. credit card disclosure or the credit card act. In addition, if you are 60 days late on a payment, this protection also disappears.

A variable rate (which most credit cards have) is tied to an index and can also increase if the index increases. But even if your credit card has a fixed rate today, that doesn’t mean it always will be.

In addition to changing your interest rate, card issuers can change the way your rate is calculated, says John Ulzheimer, president of consumer education at SmartCredit.com. So a fixed rate card could become a variable rate card in the future, he says.

Two caveats, courtesy of CARD: an increase in interest will only apply to the new charges (your current balance will be valued at the old rate) and the issuer must give you 45 days notice.

On a more positive note, your higher rate may not last forever. If your issuer increased the rate after you paid your bill late, or not at all for two consecutive months, then your rate could go down.

Under CARD law, the issuer must review your account after six months. If you have behaved well, the issuer can reset the APR to your pre-penalty rate.

Fact # 2: You can say “no” to a change of interest.

If your credit card issuer increases your APR, you can say “thank you, but no thank you” under the CARD Act.

It’s possible the company will make a deal for you and let you keep the old interest rate (get it in writing), says Ulzheimer.

However, keep in mind that it’s just as likely that the issuer will reduce your line of credit, increase your minimum payment, or simply close your credit card, he says.

What the issuer cannot do is require you to pay off the entire bill in the short term. If you decline the new rate, you have at least five years to pay your balance below the old rate.

Fact # 3: Your credit card can protect your purchases.

You buy something online and it never happens. What you ordered in store is not what ships. A charge appears on your bill that is not yours. Don’t worry, your credit card has you covered.

Credit cards offer certain rights to consumers that can offer powerful protection.

For example, the maximum liability for unauthorized purchases on a stolen or lost credit card is $ 50 under federal law, although most issuers offer no liability. However, if you report the loss before your credit card is used, you are not responsible for any charges that you have not authorized.

Additionally, the Fair Credit Billing Act allows cardholders to request a refund from their credit card issuers for an unsatisfactory purchase. The fee must be at least $ 50 and the purchase must be made within 100 miles of your home. You should also have made an effort to resolve the issue with the seller first.

In addition to federal rights, some cards offer return protection, protection against lost or broken merchandise, or extended warranties. Check your card’s terms and conditions to see what protections your card offers. Knowing these lesser-known details can sometimes save you hundreds or even thousands of dollars.

Fact 4: Your card may be refused abroad.

When traveling abroad, be sure to bring a card that can be accepted abroad.

When I was visiting family in Russia a few months ago, I was excited to take my mom to lunch or dinner whenever possible and possibly earn 5% cash back with my Discover it® Cash Back ( up to $ 1,500 in purchases per quarter when activated, then 1%), since restaurants were a bonus category this quarter.

Unfortunately, none of the restaurants I visited in Moscow and St. Petersburg accepted Discover. The same happened with my American Express® Gold card. Despite the card offering 4X points at restaurants “around the world”, I did not earn any rewards on my trip due to Amex’s limited acceptance.

My Mastercard and Visa cards, on the other hand, worked great everywhere I went.

When traveling abroad, be aware that some of your cards may not work. Although Visa and Mastercard are safe bets, sometimes you will even have to rely on cash as it is still the preferred method of payment in some places.

You should also let your credit card company know in advance about your travel plans abroad. Otherwise, the issuer could temporarily suspend billing privileges due to fraud concerns.

Fact # 5: Card balances can be tricky.

If you know how credit works, you know it’s best to pay off your entire card each month and keep a low credit usage rate (or the amount of your total credit limit that you use expressed in percentage).

To build or maintain good credit, be sure to never carry a balance by always paying in full before the payment due date.

However, that may not be what your credit report is telling lenders. Which give?

The problem is, credit card issuers typically report shortly after the end of the billing cycle, which can be days or even weeks before your payment is due.

See linked: When Do Credit Card Companies Report to Credit Bureaus?

So if you haven’t paid your bill yet at the end of the billing cycle, the amount you owe will be reflected on your credit report. If the amount is large (more than 30% of your credit limit), it can seriously affect your credit score.

This can be a minor issue if you pay off your card in full and it is reported on the next billing cycle. However, if you’re getting ready to apply for a large loan, like a mortgage, an unexpected, high credit card balance on your credit report can be bad news.

To avoid this, it’s best to always know where you stand with your credit card balances and pay them off as soon as transactions are posted.

Fact # 6: Late payments have an impact.

Your bill is late if your payment is received after the statement due date. This means that your credit card issuer could charge you late fees. So your credit is also bad, isn’t it?

Nope. Your issuer cannot report an overdue account to the credit bureaus until the invoice is past the 30 day due date in accordance with the reporting guidelines of the credit bureaus. And it can’t raise your rate unless you’re 60 days or more late, according to CARD.

“I think it’s one of those big secrets that a lot of consumers don’t know,” says Ulzheimer. “Delinquency means you have a full cycle of delay. “

In addition, issuers cannot set payment deadlines at noon under the CARD law. The deadline is 5:00 p.m. on the invoice due date.

Your issuer must also mail your invoice to you 21 days before the payment due date. Plus, it should be due on the same date each month, Ulzheimer adds.

“They can’t keep moving it,” he said.

Fact # 7: Credit card issuers might pay to keep you.

Sometimes a particular credit card works well for you, until it doesn’t. Closing a card isn’t good news for your credit, and you might not be excited about your options for a product change.

Fortunately, there may be another alternative. Some issuers may encourage you to keep your card with a retention offer.

When you call your credit card company and say that you are considering canceling the card because you don’t want to pay an annual fee or the rewards no longer work for you, the issuer may offer an incentive to persuade you to keep the card. You can get an exemption or a reduction in your annual fees. You can even receive bonus points or statement credits.

See linked: 5 Crazy Ways To Get Credit Card Rewards

Of course, this is not guaranteed. Some issuers are known for their generous retention offers, while others hardly ever distribute them. Additionally, issuers are more inclined to try to keep cardholders who consistently spend on the card.

Either way, it doesn’t hurt to call and ask. Make sure you don’t say you’ve already decided to close the card. Just say you’re thinking about it. Otherwise, an agent may simply offer to close the card for you.

The bottom line

There is more to your credit card than its terms and conditions. The more you learn about credit cards, the better they will serve you. Hope you learned something new from the Seven Credit Card Facts we discussed and continue to learn more about credit. I’m always here to help you with that!


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