Monday, April 09, 2007
Are you paying higher interest on your credit cards than you think?
Many credit card holders mark up for a credit account with an 8.9% interest rate and then later recognize that their interest rate have been bumped to 27.4%. Why?
You cognize that your credit score impacts the credit card rates that you measure up for. But, did you cognize that a small clause in the mulct black and white of the credit card terms and agreements, called the "Universal Default Punishment Clause" may intend that you're already paying a higher interest than when you signed up for the credit card? What makes this mulct black and white mean value to you?
If your credit score travels down or one of your other credit statuses change, then your interest rate additions significantly. This doesn't intend any new charges you do to this peculiar credit card account: the higher rate impacts the full balance. Yes, even points you purchased with the apprehension that your interest rate would stay the original rate.
Your credit grantors periodically reexamine your credit report. Almost half of all credit card companies take advantage of you when you are perceived as a delinquent or high-risk borrower. The small black and white in your account information may include the universal default penalty, which allows the credit card company to increase your interest rate if it uncovers any of these six changes in your credit report:
1. You have got a late payment on any credit account. The company doesn't care if you've never made a late payment to them.
2. You travel over your available credit line on any credit account. Even if you unknowingly charge a small amount over the credit limit, which many credit card issuers allow you do; your interest rate can be raised.
3. Your credit score declines. Just one late payment can ache your credit score. Experian reports that people with no late or missed payments in the last twelvemonth had an average credit score of 759; consumers with one or more than late payments in the past twelvemonth had an average score of 598.
4. You charge up too much on one account or many credit cards. If you charge up your credit card near the limit, or even charge up some of your credit cards over the preferable relative amounts owed, you could pay extra for the privilege. The amount owed on a credit line compared to the available credit is termed the relative amount owed. With a credit card bounds of $5,000, the score will be higher if less than $2,500 is owed. Even better is to owe less than one-third of the available credit or less than $1501. Owing less than 10 percent of the available balance gives you the best possible rating. On the other hand, owing over $4,500 on an account with a bounds of $5,000 lowers your score considerably, especially if you have got too many credit cards and other loans with high balances compared to available balances.
5. Your charge activities bespeak a high debt-to-income ratio. If your credit card issuer sees that you've made many new charges and believes that you're getting in over your head, they may raise your interest rate. Even if this is a impermanent situation, like many new home proprietors who do many purchases in a single month, the companies take advantage of the unsuspicious credit card holder.
6. You open up new accounts. Opening new credit lines, especially consumer finance accounts, lowers your credit score and adds notational systems like "Too many consumer accounts" to your credit report. Once again, your credit card company may take advantage of this to raise your interest rate.
Credit cards that start with a low interest rate can leap to interest rates as high as 29.99%, if they happen any of these new statuses listed on your credit report.
Check your credit card statements closely; expression to see if your credit card grantor raised your interest rates. If you happen that you're paying more than than you thought, phone call your credit card company and inquire the reason. Once you determine the cause, you can work on your credit issue. After you've fixed the problem, phone call back and inquire for a reduction in your interest rate.
Copyright (c) 2005 Jeanette J. Fisher All Rights Reserved.