Factors That Credit Card Companies Look at When Evaluating an Application
Everyone has their secrets. Your credit card company is no different. The reason they do not want you to know certain things is that it lessens the control they have on you. The more you know about how your company operates, the less they can manipulate your situation. I have a few examples listed below on what you should keep an eye on. That way you know when your credit card company is trying to pull a fast one on you.
1) The Law Does Not Control the APR
Your company might set a precedent in the terms and conditions. However, there is no legal cap on what your rate can be. There are, however, usury laws that states use to regulate how much a company can charge you. Did you know that, back in 2015, the average APR was less than 15%? More importantly, the penalty rates can go as high as 30% in some states. That is exactly why some of your rates increase as high as 26.99-29.99% for the rates. You are getting charged a penalty fee disguised as an APR.
2) The Fixed Rate
The fixed-rate is another example of how the companies try to manipulate your financial state in their favor. Did you know that you could pay your bill on time and still have your rates increased? The company can decide to raise your rates at any time they choose. That is a little known fact your card company does not want you to know. The fixed-rate option you have is not really "fixed." They do have to let you know at least 15 days prior that they are doing it though. Read your terms and conditions before signing. They do sometimes through some monkey wrenches in the contract in hopes you will not take the time to read it.
3) Missed Payments Okay.
You missed one payment, thinking it is not a big deal. I would hold onto that thought a little while longer. It could be a bigger deal than you know. Do you have more than one credit card from the same company? Separate companies? It does not matter because they are going to increase your rates. Once again, this is a little known fact that most companies do not want you to know. One missed payment could raise your rates on everything. The silver lining is the company has to rethink its decision to raise your limits after 6 months.
4) APR Affects Everything You Do
Some customers assume that one bill has nothing do with the other. You might want to rethink that ideology. Your card company has probably included a clause stipulating they can raise the APR, anytime or anyplace. The only problem is they will not make you aware of it. They are making money off of you without your knowledge. One missed or late payment on the light bill could raise your APR on everything else, including your credit cards.
5) Attracting Customers With Seasons Of Change
One thing that pulls customers to a certain credit card is the rewards being offered. I would be attracted to it too. However, things are not as transparent as you might think with the rewards programs. Think of the rewards programs as the seasons of change. One season you are feeling sunny like a warm summer's day. The next season everything turns to winter. Companies can increase or decrease the points system at their discretion. They will make it harder for you to earn the same rewards you got the last time by raising the stakes. That is why one minute you are feeling warm and breezy, and the next you are feeling cold and clammy. Do you have one without an annual fee? You might want to be sure that you still have it after a year. They can take that away too. "They will dangle the carrot in front of you to entice you into accepting. One the bunny accepts the carrot they take it away."
6) Love Of Shopping Is A Revolver
There is nothing wrong with shopping. I love to shop as much as the next guy or girl. Unfortunately, there is a downside to this shopping. There are a lot of customers who fail to pay their balance right away. That will spell bad news for your credit history and score, but good news for the companies. Credit card companies stay in business with revolvers. They cannot make their money from people who pay down their bill in full right away. That is why they concentrate on people who do the opposite. Something you should be aware of moving forward.