Sometimes when it comes to credit card companies, if you don’t ask, they simply won’t tell. At the end of the day, card companies are like any other business, meaning they need a profit to survive. The Bureau of Consumer Financial Protection estimates that nearly 170 million Americans have credit cards.1 That’s a lot of us, so it’s time to be smarter consumers by learning these five top secrets credit card companies could be keeping from you.
Tip #1: Paying Early Cuts Your Balance Faster
Most credit card companies charge interest on your average daily balance, so if you can’t pay off all your balance at once, pay some of it early. For example, if you have a $2,000 balance, but immediately pay $500 at the beginning of the month, interest will only be charged on the remaining $1,500. This may seem insignificant, but it adds up in the long run.
Tip #2: You Can Ask for (Some) Penalty Fees to be Waived
If you find yourself with a late fee, don’t hesitate to call your credit card company and ask for the fee to be waived. Going into it, you might think there’s nothing to be done, and you’ll have to pay up. But credit card issuers can be generous, especially if you have a great payment record and are in good standing. You can usually request your fee to be waived once a year- twice a year if you’re lucky.
Tip #3: Credit Card Companies Need You More Than You Need Them
Similar to the point above, if you ever want a lower annual fee or a lower interest rate, all you have to do is call your credit card company and ask for it. They make money from YOUR spending, and believe it or not, this gives you some power over them. If you call your card issuer and say, “I’m thinking about switching over to (rival company) because they are offering me a lower interest rate,” (and you have a good credit score and are up to date on all your payments), chances are that they will be ready to negotiate and give you an attractive offer.
Tip #4: Your APR Will Dramatically Increase if You’re Not a Smart Card User
If you have a credit card with a reasonable annual percentage rate (APR), don’t take it for granted. Any mistake on your part, whether it's late payments or spending over your limit can significantly increase your APR. The good news is that not every card comes with this particular penalty. Therefore, if you’re applying for cards, make sure to read the application closely to see if this applies to you.
Tip #5: Card Companies Can See Your Credit History
Credit card companies can actually look at your credit profile and raise interest rates if they notice some bad behavior. If you missed something related to another credit card or even a loan, you might end up paying more on your credit card balance too. The next time you're late on your mortgage payment, check to see if your interest rates have changed.
Now that you’re aware of some of the top things credit card companies don’t want you to know, you can make better financial decisions. Remember to read the fine print in your card applications so you don’t let anything else slip by. As the consumer, you have more power and knowledge than you think - use that to your advantage in order to save money.