If you think you know everything you need to about your credit card, think again. There is a lot of information credit card companies do not disclose about their products. Listed below are six things credit card companies do not want you to know and why:
You’re the boss.
Banks and credit card companies are not the ones putting you on a leash when you avail of a credit card. In fact, it is the other way around—they are the ones working for you. You are the boss. You actually have the power to fire your card company if you are not satisfied with their service. If firing the company seems a bit too much, as the boss, you are free to call them out on any concerns or issues you may have regarding their products and services.
1. You can ask for lower interest rates.
If you have been a loyal client who always pays in full and on time, you can use this to your advantage in certain situations, such as asking for lower interest rates. Try calling your bank and negotiating your current interest rate. Just make sure to ask nicely.
If they will not approve you for a lower interest rate, then tell them that as much as you would like to keep your credit account, you might be forced to switch if they fail to offer better terms. As a supporting statement, you may also tell them about a new card you are eyeing—one that offers a lower rate. Credit card companies compete with each other for clients. It is your company’s loss if they let you slip from their hands just because they refuse to give you a lower rate on your loan—especially if you have good credit standing.
2. You can ask for a higher limit.
You are actually free to contact your credit card issuer and cite reasons why you deserve a higher credit limit. Clients with good credit score have bigger chances for having their credit limit raised. Your request is more likely to be approved, of course, if you pay off your monthly balance in full.
3. Fixed interest rates are not really fixed.
“Sign up now and get _% interest!” We always see or hear this line from ads and credit card representatives promoting teaser rates. Fixed rates are offered by credit card companies to attract more clients. It may sound tempting but offers like this are often temporary. You might enjoy the advertised interest rate in the beginning, but you will notice that after six months or so, your interest rate will start to inflate or is no longer fixed.
This should not surprise you. Credit card companies have a policy that requires them to give 15-days’ notice to their cardholders about incoming rate changes. These notifications are often sent via snail mail so do not make the mistake of ignoring your mail, especially if it is from your bank!
4. Do not stick to paying minimum charges.
If you think paying minimum charges on your credit card saves you money, then you could not be more wrong. Why then, do credit card companies allow cardholders to pay in minimum amounts? What they do not tell you is that when you pay only the minimum, it is to their ultimate advantage. The longer you take time to pay off outstanding debt, the more profit they make on interest rates.
Credit card companies allow cardholders to pay a minimum of 1% to 5% of their credit balance. They can then carry over the remaining balance to the next statement. In other words, the more minimum payments you make, the higher the total amount you pay in the long run. Paying balances in full might hurt your wallet but this is the only way to avoid accumulating ridiculous amounts of debt.
5. A slow payment process can cost you late penalty charges.
Have you ever noticed how some credit card companies seem too slow in processing your payments? They set up their system to process incoming payments for almost a week or more. Payments that arrive a day or two earlier than or on the due date could get processed late, enabling the bank to rack up a late penalty charge for the cardholder.
This is actually one of the dirtiest tricks in the credit card industry. To avoid this, make it habit pay your fees electronically way ahead of the due date, through an ATM or online.
6. Read the Fine Print
If you are aware of these facts, you can hopefully avoid unnecessary penalties and save more money. If ever you are going to apply for a new credit card, make sure to read the fine print. Credit card companies cannot fool you if you know their tricks and secret trades. And most importantly, do not forget or neglect to pay your dues on time to attain good credit score.
This article is contributed by Money Hero, Hong Kong’s leading financial comparison website where you can compare a broad range of financial products – from credit cards to insurance plans.