The credit card business is a tricky one, and if you understand the tricks your financial situation will be better for it. When it comes to credit cards, there are tricky terms and conditions, rates and fees, and lingo that many of us just aren’t familiar with. This article points out four tricks of the trade you should know. Knowing how credit card companies work will help you manage your cards better. After all, there are good reasons to have credit cards, but if you know some of the tricks, you will be better suited to reap the benefits.
- Interest Rates
The average credit card interest rate is about 13 percent, but credit card rates actually range from 0% up to 40%! The first step in understanding how to manage your credit cards is to know what rate you have on each of your cards. To do this, you need to pull out your credit card statement(s) and check your rates. You can compare your rates to the competitive rates of other cards by checking out the latest credit card offers here at Credit Card Offers IQ. If you discover that your rates are much higher than the going rate, you should call your credit card company and ask them to lower your rate. At first this might sound uncomfortable, but it just might work. The truth is if you leave your credit card company for a better card offer, they are going to try and get you back with a lower rate anyway.
Not sure what to say? Follow Jean Chatzky’s sample script:
You:“I have [name of card] with you and my interest rate is [X] percent. I received another offer in the mail from [other bank’s name] for [X] percent, but before I take it, I want to see if you can lower my interest rate instead.”
If the representative says they’re not authorized to do that, you say:
You:“Look, you and I both know that if I transfer my balance today, next week your bank is going to send me an offer to come back at an even lower rate. Why don’t you just save the bank the cost of that effort by giving me several points today?”
If the rep says it’s not possible because your credit card is at a fixed interest rate, you say:
You:“Actually, that doesn’t have anything to do with whether or not you have the ability to lower my interest rate. A fixed interest rate only means that my rate doesn’t vary with fluctuations in the prime rate. In fact, the bank can raise it on my account at any time by just giving me 45 days written notice. And the bank can, if it chooses, lower the rate today.”
If the rep still says they’re not authorized to do that, you say:
You:“I’d like to speak to your supervisor.”
Then speak to a supervisor and follow the above script again.
- Late Fees
- Find the Catch
- Annual Fees
Nobody likes to pay annual fees, but unfortunately its the nature of the business unless you find a card that has no annual fee. For cards with annual fees, they typically range from $35 to $100 annually. Depending on the card, you might be able to get your annual fee waived, but you have to call and ask. Usually rewards cards that have special offers are probably not going to waive the fee. However, other credit cards that don’t offer significant rewards may waive the fee. If you are a good customer then you have a good chance of getting this fee waived.
Late fees can range from as low as $15 to as high as $39, and it doesn’t stop there. Did you know that if your late on your payment then the credit card company has the right to increase your interest rate? If you have a late fee or you know your going to be late on a payment there is a way to deal with this. First, if you have a late fee go ahead and call the credit card company and ask them to waive it. Most people don’t realize this, but these companies waive late fees all the time. You just have to ask. And if you know your going to be late on your payment, call them ahead of time and let them know. Ask them for a grace period so you don’t get charged the late fee.
Credit card companies are always offering special 0% offers to get customers. A 0% offer makes any credit card more appealing, but there’s always a catch. Your job is to know what the catch is so you stay out of debt. Most 0% offers are usually for 6 months, 12 months, or 18 months. The 0% is usually offered on either purchases or balance transfers, and sometimes both. You have to read the fine print to know exactly how the offer works. Legally, credit card companies have to share with you what the catch is, you just have to be smart enough to look for it. The catch usually involves an interest rate increase if you are late on your payment. If you are late once it may jump up to 20%, and if your late twice it could be up to 29%. Also, if you make a balance transfer there will most likely be a transfer fee. To avoid any surprises you need to check the card terms and conditions and look for the catch.