Getting Wise about Your Credit Card Deals Processing

November 16, 2007

These days, probably, every adult person in this country has credit cards. And there is no need to explain why those little plastic cards make our life more convenient. Everybody knows that. However, the percentage of people, whose educational attainment in the field of personal money management leaves much to be desired.

Nowadays you can find numerous educational supplies, internet sources and other ways to learn how to manage your finances right. Consumer Union, for instance, is a nonprofit, independent organization created to serve and protect consumers, is a great source of information.

This union has recently released an animated training short movie "It's Always Christmas Time" concerning credit matters in a satirical style. It reveals the reasons for unexpected rise of interest rates, appearance of some extra fees and other out-of-the-blue changes of credit cards features.

It as its object it had not only clearing up some tricky moments in credit cards processing and warning card holders against abusive practices applied by credit card companies, it was also aimed at provoking higher interest in money management and craving for economic knowledge in them.

This method proved to be successful. Those card holders, who had watched this movie, displayed interest towards the issues touched upon in the plot. Their curiosity resulted in numerous and surprisingly smart questions related to credit cards. Here are some of them.

Q: If I fail to pay off my balance on time and I am given universal default, can a credit card company raise interests on my credit card if I decide to apply for a new credit card deal of for a car or home loan?

A: Yes. Some of the credit card companies have a legal right to increase your interest rates. And it is not necessarily must be a universal default case. Even your attempt to close an old account or to open a new one can cause your interests raise. Moreover, in case you do not get approved for a car or home loan, your credit score will be damaged. This, better that everything else, enables your creditor to increase your interest rates.

Q: Does the so-called "fixed rate" remain the same for life?

A: No. Do not get misled by all those classifieds. Banks can change rates whenever they consider it necessary. All you can expect from your creditor is a 15 days notice about any your deals' terms change.

Q: Why do creditors penalize me even if I make payments on time?

A: You need to be very careful with your exact due dates. Sometimes, card issuers send statements with the changed due date to the earlier one. So, by the day you make your payment, you are accrued a late payment fee.

Q: I contacted my creditor and asked if I could make a purchase that would exceed my credit limit. The answer was positive. Why then they charge me higher fees?

A: The thing is you were allowed to exceed your credit limit, but you were not exempted from extra fees that, according to the terms of your credit card offer, are accrued to you in case you go over your credit line. The reason for that is making profit. Credit card companies don't ever miss such a chance.

So, these are a few of the aspects that credit card owners wanted to clear up and get more profound knowledge about after watching the short movie. This proves such educational programs make sense.