March 17, 2009
-
Guidelines to the CC Fine Print, Pt.4
The remaining common threats.Pay Downs: Especially, beware of credit card clauses where high-interest categories can never be paid down until all lower-interest categories are paid in full. This means that a $100 purchase or transfer fee tied to a 17.99% APR can never be paid down until after the entire $5,000 transfer amount with the 0% APR is paid in full. The 21.99% cash advance balance can never be paid down until after the on-going 0% APR $4,835.51 new purchases balance is paid in full with no new charges pending. When transferring a balance, make sure the transfer fee interest is not higher than the transfer balance APR, itself, and never place any new purchases on that credit card if their interest rate is higher. Use a different credit card for purchases.
Universal Default: This can ‘gitcha'. If you have several credit card accounts open and one of them undergoes a ‘burp' (like a late payment), contracts which include this clause (by any other name) can ‘take you to the cleaners'. Because of any ‘delinquent' account in your credit report, an account with this clause can jack your interest to 29.99% overnight because of a totally unrelated ‘derogatory' in your credit report.
Special Fees: The credit card industry is constantly searching for ways to stave off their ‘charge-off' crisis and the pounding they're getting on Wall Street. New techniques are being tested all the time to get credit card holders in ‘good standing' to pay for the shortcomings of those in default. So, they do things like creating new types of fees to accomplish this. These are hard to foresee and the government is getting involved with this problem.
Many credit card lenders are backing down on these practices under the threat that Congress will take further steps to stop them. Nevertheless, watch very closely for indications that these practices are in play. If anything is suspicious, ask Customer Service to explain it better.
Recourse: Remember that you can always negotiate credit card conditions, even after the fact. You will usually have better success by speaking with some of higher authority then the first person you reach on the phone.