The Details That Credit Card Companies Try to Hide (and Hope You Won’t Read)
It is very simple. As a consumer, you are signing up for one of the worst consumer contracts ever created. As a result, the credit card company has little risk to loan money to you. It is the credit card company that is getting the good deal. Take the new Discover cash back benefit. Why is this card such a great deal for them and horrible for you?
They have the ability to evaluate your credit and assign anywhere from 11% to 23%. The very best credit rating gets 11%. The worst is 23% which is only 3 to 4% away from what we use to call penalty rates.
Those Interest Rates are Variable and Going Higher
As interest rates are increased, they will raise your interest rates. Said another way that rate of 23% has no place to go but up. Interest rates are at historic lows and have no place to go but up.
The Big Bait and Switch with the No Late Fee Charge
Sure, they won’t charge you a late fee if you are late. They can consider you in default. The card agreement says this:
You are in default if:
- …….including failing to make a required payment when due, exceeding your Account credit line or using your Card or Account for an illegal transaction. If you are in default, we may declare the entire balance of your Account immediately due and payable without notice.
The good news is that they won’t charge you a late fee. The bad news is that they can declare you in default. Oh, and if they put you in collection, you will flip the bill for the legal fees for the debt collection.
They Can Change Your Contract
The card member agreement states “We may cancel, suspend or not renew your Account at any time without notice.”
Then maybe my all-time favorite contract language. “We apply payments and credits at our discretion, including in a manner most favorable or convenient for us.” I can’t make this stuff up!
You don’t find any of this in the terms and conditions that they show you up front. It is in the 18-page card member agreement that they send to you after you transfer the balance and start using the card. Further, it says in the agreement that the minute you use your card you agree with the card member agreement (which you have not read yet). Fortunately, if you do a Google search you can find the card member agreement on the internet. I will say that this particular card member agreement was not easy to find.
Now any question why they want your debt?