Knowing as much as you can about the credit cards you have and about the company that issues them is all a part of being financially savvy. While the Credit CARD Act, passed in 2009, aims to make credit card practices more transparent and fair, there are still a few little known facts about credit card companies, which can affect your relationship with them.
1. When it Comes to Interest, the Sky Can be the Limit
Legally, a credit card company can charge as high of an interest rate as it wants, as long as the rate applies to new purchases. Case in point: in 2011, First Premier Bank shocked some cardholders when it introduced a new rate that was nearly 80 percent, according to CNN Money.
2. A Fixed Rate Might Not Be Fixed
Interest rates tend to be the central focus of the little known facts about credit card companies. For example, another “secret” fact is that a fixed rate doesn’t mean the rate needs to stay the same forever. Instead, “fixed” simply means the card company has to tell you before it raises the rate.
3. They Prefer Variable Rates
The CARD Act made it a bit trickier for card companies to change fixed rates, which is one of the major reasons why you see so many cards offering variable rates, which change based on the market.
4. You Might Get a Better Rate, if You Ask
Just as a credit card company can raise your fixed rate after giving you notice, you can also try to get it to reduce your rate. If your rate is so high that paying your bills is a challenge, the company might be willing to work with you and reduce it.
5. You Can Say No to a Higher Interest Rate
If your card company lets you know that it’s going to bump up your rate, you don’t have to just accept it. You can decline the rate increase. The company might close your account at the point, but it can’t legally make you pay the full amount right away.
6. Cards Don’t Really “Expire”
Although you probably receive a new credit card in the mail every few years, the truth is that they don’t actually expire. Your card number stays the same, after all. Typically, expiration dates are used to prove that a person actually has the credit card in his or her hand when placing an order online or over the phone.
7. They Do Allow Minimum Purchases
For years, credit card companies didn’t allow merchants to set minimum purchase limits. That’s changed in recent years, though. For example, Visa now allows merchants to set a minimum purchase amount for credit cards, as long as it is not more than $10.
8. At Most, You’re Responsible for $50 if Your Card is Stolen
Under federal law, you can’t be responsible for more than $50 in unauthorized charges. The amount can be even less, depending on your card company’s rules.
9. Companies Spend Money to Gain Customers
The average credit card company spends about $80 getting a new customer, according to the Database Marketing Institute. If all goes well, that customer will bring in $120 per year, meaning the card company makes a profit.
10. Overlimit Fees Should a Thing of the Past
You can thank the CARD Act for this one: under it, a card company can’t let you go over your limit, then charge you a high fee. Instead, you have to opt-in to over-the-limit charges
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