Tricks+and+Tips1

__**Tricks used by Credit Card Companies, and Tips for Avoiding Them:**__

The issue of fairness tends to get tangled up in the world of credit cards. Some practices that seem egregious at first glance actually make sense when you understand their rationale. Other policies don't hold up so well to scrutiny, even though they're widely accepted in the industry. So what is fair and what isn’t?

__Interest Rates:__ - //Fair//: charging different customers different interest rates or offering different terms, based on their credit histories - //Unfair//: not telling folks upfront what interest rates or terms they'll get.

In the best of all worlds, you would fill out an application, be told what interest rate you are approved for, then be given the chance to OK that rate or decline the offer. It rarely works that way… Oftentimes you won't even know what rate you've been approved for until the card shows up in the mail.

Credit limits are almost never disclosed in advance, either. This can be a serious issue for people transferring balances because shifting debt from a high-limit card to a lower-limit card can damage their credit scores.

- Don't hang on to a card you don't want, the damage isn't likely to be as serious with a newly issued card as it might be with one you've held for many years. - Don’t apply without proper thinking and consideration for cards. - If you're looking for a lower rate, first contact your existing issuer and negotiate for one.
 * What to Do:**

__Slanted Reports:__ - //Fair//: Reporting your missteps to credit bureaus. - //Unfair//: Reporting half-truths

If you get credit and use it responsibly, you can build a credit history that allows you to get the loans you need to buy a home, build a business or accomplish other goals. However, some lenders deliberately make their customers look like worse credit risks than they are. Some of the worst offenders are issuers that don't report their customers' on-time payment records at all. When a lender doesn't report a customer's credit limit, the bureaus typically use the "highest balance charged" as a proxy for the limit. The problem comes when borrowers charge about the same amount each month.

- If your issuer isn't properly listing your credit limits, you can request that they do so. - If your issuer is one that will not do this, you can either charge up a big balance to reset your "highest balance charged" or switch to another card issuer.
 * What to do:**

__Soaring Rates:__ - Fair: raising your interest rate if you miss a payment - //Unfair//: increasing your interest rate if you’re a few days late

The credit card companies know there's a big difference between late and skipped payments. That's among the reasons payments that are less than 30 days overdue typically aren't reported to the credit bureaus. But many issuers will still take advantage of your mistake by sending your rate skyward, even if your payment arrived only hours (not even days) late.

- Don't carry credit card balances. Card issuers have far fewer ways to mess with you when you pay your balance in full every month. - Reduce the likelihood of late payments by setting up recurring payments in your online bill-payment system or by agreeing to an automatic debit so at least the minimum payment is withdrawn from your checking account each month. - If you do get hit with a late fee, or a fee plus a higher rate, talk to your credit card company.
 * What to do:**

__Big Fees:__ - //Fair:// charging late, over-limit and balance transfer fees - //Unfair//: charging outrageous later, over-limit and balance transfer fees

Until the mid-1990s, the typical penalty fee was about $10. Last year, the average late fee was $35, and many companies charged $39. The average over-limit fee was a little more than $32.

Some issuers also removed limits on the balance transfer fees they charge. It makes sense to charge borrowers something for handling a balance transfer, just as it's justifiable to subject them to some kind of penalty for paying late or going over the limit. It's the amount that's being charged that makes no sense. These fees bear little relation to the costs or risks involved.

- Avoid late and over-limit fees whenever possible. Set up automatic payments so at least your minimum balance gets paid every month. - Track your balances -- which you can do online, via phone, by using personal-finance software - Before you transfer a balance, read the fine print and calculate all of the fees you're likely to face.
 * What to do:**

__Too Many Cards__ - //Fair:// issuing cards with low credit limits to riskier borrowers - //Unfai//r: issuing multiple cards with low limits to risky borrowers

Credit card companies wisely limit their risks with certain customers by issuing cards with low limits, say $200 to $500. You're most likely to get one of these cards if your credit history is short or troubled. And, as you show you can responsibly use the credit -- by paying your bills on time and not maxing out your card -- a typical issuer will reward you by raising your limit.

However, some credit card companies continually issue additional low-limit cards to the same customers. The big downside for borrowers is that they have more due dates and limits to track. The practice increases the chances a cardholder will mess up and incur late or over-limit fees.

- Don't max out your credit cards or charge more than you can pay off in full every month. - Instead of accepting a new card, ask for a higher credit limit on the one you have.
 * What to do:**

__Paying Twice__ - //Fair//: charging interest on balance transfers - //Unfair//: charging interest before the check clears

When you're approved to transfer a credit card balance, the company that's receiving your balance sends a payment to the company that currently has your debt. This payment may be electronic or may be a check. The issue appears when your new credit card company begins charging interest on the balance transfer. Some start doing so long before the balance is actually switched, which means you could wind up paying interest to two companies on the same debt for a week or even longer.

- Try to press for an electronic transfer whenever possible.
 * What to Do:**

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