Dangers of Credit Cards
This article opened my eyes to the dangers of credit card use. It lists the “Top 10 Hidden Dangers of Credit Cards.” Here are the top three:
1. The universal default penalties. Card issuers regularly check their customers’ credit reports for late payments on any of their bills. Any late payment can be used as an excuse to trigger a hike in your credit card’s interest rate, even if you have never made a late payment to the card issuer.
A recent study by Consumer Action, a San Francisco-based consumer advocacy group, found that 44 percent of credit cards had universal default penalties in 2004.
2. Bait-and-switch card offers. Direct mail offers generally advertise the issuer’s premium card at an eye-popping low interest rate, while the fine print says the company can issue a more costly non-premium card with a higher annual percentage rate if you fail to qualify for the premium card. Just because you apply for a card with a low rate doesn’t mean the card that shows up in the mail actually carries that low rate.
3. Shrinking grace periods. Historically, grace periods — the time during which your transactions don’t accrue interest — were 30 days long. They now average 23 days, and some issuers have whittled the grace period to 20 days. Some cards have no grace period at all.
To see the other 7 hidden dangers of credit cards, click here.
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