Consumer Union's Lesson on Your Credit Card Deal Traps

Sometimes they say - no news is already good news. It is especially true to something new showing up in the credit card industry which is always aiming at increasing its revenues. However, Consumers Union, standing on the guard of poorly credit educated or completely ignorant consumers, is never tired of making attempts at revealing and controlling abusive practices of credit companies.

Not long ago, one of their attempts developed into an animated satire "It's always Christmas Time (for VISA)" which is a sort of amusing lesson about unexpected boost of interest rates, appearance of fees or unplanned changes of credit card terms.

The animation was released not only to educate customers on the numerous traps their credit cards imply but also to intensify support for the long waited consumer-oriented reform in the credit card industry.

Our research has shown that active credit cardholders who viewed the animation became more knowledgeable about the ever growing number of ways creditors fool them and so make money off them.

Their increased awareness is sensed through the surprisingly wise questions they asked on a number of points which were not quite well revealed in the animation.

So, to ensure they are better protected from unfair creditors' practices, customers attempted to clear up the following:

Q: If it is a case of universal default, can credit companies raise the interest rate on my card when I make a new credit card deal or even inquire about an auto loan?

A: Yes, some credit companies can legally push up your interest even if you never default on any of your credit cards but only attempt to open a new account or close an old one. A new inquiry will hurt your credit score and the creditor will have all the grounds to increase the rate.

Q: Will the "fixed rate", as they call in the fine print, remain fixed for the life of the balance?

A: You wish. The credit card company reserves the right to issue a notice of the terms change at least 15 days before the change. And be sure, the bank will send out such a letter to most of its customers, as the report of November, 2006 showed.

Q: Why do I get penalized even when I pay my credit card bill on time?

A: You have to be very attentive when you approach the due payment day. Credit card issuers have the bad habit of mailing a statement with the due date changed. It may appear you do not have enough money to make the payment and it results in a late payment fee which has doubled by this day.

Q: The bank allowed me to make a purchase exceeding my credit card limit. So why do they still charge me a hefty fee?

A: Remember, creditors are self-profiteering by nature. They've done their job - they detailed the fees and rates in the fine print. If you do not understand them properly - you lose. So, the company allows you to go through with that big price purchase, assuming you know what will come out of it.

Q: Why do I end up in a greater debt when I make a balance transfer deal to repay the debt faster and at a lower cost?

A: Well, you really can benefit from a balance transfer credit card offer if you use it for paying back the debt only. Once you make a purchase with this credit card, you pay interest rate on this purchase and it can be as high as 18%!

So, these are the points some cardholders wanted to get clearer about after viewing the animation. In fact, they are vitally important issues every customer should know about to guard themselves from the self-profit practices of creditors. The lesson by Consumers Union did not go in vain and these questions prove that.

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