Credit Card Practices to Watch Out For

If you are one of the majority of Americans (and citizens of just about any other industrialized country) who has and uses credit cards on a regular basis, there are some things that your card issuer does that you should know about. They could be costing you serious money every year. With competition for credit card customers so fierce these days, you have little excuse for not getting the best credit card deals you can find, and leaving the less favorable cards in the waste basket (properly shredded, of course).

Credit Card Practice to Watch For #1 –Foreign exchange fees – These fees are charged any time you purchase something on your card from another country. The exception to this is Capital One, who currently does not charge it’s customers a currency conversion fee. The conversion fee averages a little less than 3%, so they can add up in a hurry. Weather you’re traveling or ordering something online from a company whose e-commerce website is set up outside the U.S., or wherever your credit card account is based, these fees will be added to your purchases. The bank charges you a fee for currency conversion, and you pay handsomely for the service. If your account is U.S. based, the fee is based on the U.S. dollar value of the purchase, after conversion.

To avoid this you can use your card as little as possible when traveling overseas. Exchange your currency at your bank and use traveler’s checks. For some travelers, the fee is worth the added convenience and protection offered by using their credit card. If you are one of these consumers, you should be aware that you are paying for the privilege.

Credit Card Practice to Watch For #2 –High priced credit card insurance and monitoring – With the high instance of large credit card balances, credit fraud, and identity theft a large market has been created for customers that are looking to protect their good names, and more importantly, bank accounts. This has given rise to a huge number of products offered by credit card issuers to guard against loss in the event of credit card fraud, ID theft or the card holders inability to pay their credit card bill due to some unexpected problem, like stepping in front of the #17. The operator from your credit card company can be pretty persuasive on the phone when they are seeking your enrollment in one of their credit protection services, so hold your ground and at least make sure that the one they are offering is the best choice for the job.
While these services can have undeniable value, they can also be fairly expensive, especially if the benefits are limited to the issuing company’s products. Many credit card companies charge between $7.00 and 10.00 a month, or a percentage of your outstanding balance for the service. There are a variety of independent services available that guard against such losses, but are effective for all a consumer’s credit products. Look into one of these if you are of a mind to secure some protection.

Credit Card Practice to Watch For #3 –Changing interest rates – many times a credit card issuer will change the rate their customers pay on their cards, and do so with no warning, explanation or special indication. They’re sure as hell not going to send you a letter calling your attention to their little profit increasing tactic. In fact, many consumers, typically not as vigilant in these matters as they should be, will fail to notice for months, if at all. This is a practice you need to watch for.

Look at the interest rate for both purchases and cash advances (don’t get one of these from your credit card company, unless you need it for life saving surgery) on every statement. If you see the rate rise for no apparent reason, you need to call their customer service department and find the reason for it ASAP. In many cases you can get them to reverse it, and maybe even get the rate reduced to lower than it was before. In order to make this happen, you obviously must have had no late payments and be in good standing on your account.
Credit card companies are a business and are looking to maximize their profit. With the increasing number of people in credit distress, they are looking to make money from those that do pay every month in order to maximize their revenue. If you’re one of those that pay, make sure you’re only paying your fair share.