Image source: DailyMail.co.uk
In case you didn’t already know this, credit card companies aren’t “service” organizations. They aren’t there to help you despite commercials that say otherwise. What they care about are profits and they construct their agreements with cardholders to maximize profits and the ability to control the relationship to ensure they earn as much as possible from every customer.
Have you ever read a credit card agreement? We ask this question of our bankruptcy clients and very few answer “yes.” Credit card paperwork is typically five to six pages written in fine print that you’d find hard to read even if you wanted to. If you did pull out a magnifying glass and sifted through the fine print, what you found would likely be very disturbing. This is where credit card companies hide their dirty tricks.
Here are a couple of the dirty tricks credit card companies play and how to avoid getting taken in:
Image source: BathCreditServices.com
Lower the Card Limit without Prior Notice
When you sign up for a credit card, you will be told what your dollar limit is on the card. But if you dig into the fine print, you’ll see that the credit card provider can lower your limit without prior notice. If they drop the limit down to your current balance (or lower!), you can immediately be charged over limit fees and if you can’t afford to get the card below the limit, this can snowball into a mountain of debt that can cause big problems. To avoid this problem, keep your cards well below the limits.
Raise Your Interest Rate without Prior Notice
Also in the fine print of your contract, you will see that your cardholder is allowed to raise your interest with (or without) prior notice depending on the language of your contract. Your interest rate could increase dramatically and this can drive up your minimum monthly payment and make it harder to pay down your debt and can drag it out indefinitely. They cannot raise the rates on your existing balance unless you are delinquent but they can raise rates on new purchases at their discretion! Be sure to always pay at least the minimum balance and pay well before the due date.
Image sourvce: Gawker.com
Problems and Solutions
If your credit card provider(s) take full advantage of all the fine print in their contract, they can make it difficult for you to pay down or pay off your debt. This can create a situation that can spiral out of control and leave you deep in debt and with liens or garnishments plaguing you. If you owe only a couple of thousand dollars, you should be able to dig your way out.
But if your credit card debt has grown out of control and has affected your ability to service other debts such as your car loan and mortgage and your debt level is high, completely unmanageable and out of control, bankruptcy may be better. If you live in North Carolina, contact the law offices of John T Orcutt to find out if bankruptcy is the best solution for you. Your initial consultation is free!