- While the CARD Act of 2009 imposed significant restrictions on the ability of credit card companies to increase interest rates, they can still do so. Card companies cannot increase rates on fixed-rate cards during the first year without first notifying the cardholder at least 45 days prior to the increase and only after the cardholder is late on a payment. However, they can increase the rates after the first year without these restrictions, and can increase rates on variable-rate cards.
Fees, Fees, Fees
- Credit card companies love fees, as these are guaranteed money makers. They can't force you to buy something, but they can impose any number of fees. Paying your bill a few days late? That's a fee. Transferring balances from another card? There's a fee there too. And some of these fees, like balance transfer fees, cost a percentage, not a flat rate. That means the more money you transfer, the more fees you have to pay.
- Credit card companies love to claim that they offer low interest rates. While these claims are true, that doesn't mean the offers apply to everyone. Credit card companies typically have a range of interest rates that apply to a credit card, and they determine what interest rate you get offered based on your credit score, according to Liz Pulliam Weston of MSN Money. Always ask what credit rates apply to your card before you sign any agreement.
Choosing What Laws Apply
- Credit card agreements can be long, complicated documents that make people fall asleep within the first few paragraphs. If you can, read through the entire document carefully. You'll likely find a provision that says something like, "This agreement is governed by the laws of the State of X." What this means is that regardless of what state you actually live in, your credit card agreement is covered by a different state's laws. It shouldn't be a surprise to you that the state listed in the agreement usually has laws that are much more favorable toward your credit card company.