There you sit, credit card holder. Smug and comfortable in the knowledge that you are not like those other suckers who have gotten into credit card debt problems. Your credit card history is pristine because you pay your credit card balance off every month. You get along swimmingly with your credit card issuer. Those guys would never give you a bum steer.
Wake up! When’s the last time you checked your credit card’s interest rate? The good folks at Frontline have released essential reading for students considering getting into the credit card game as well as anyone else who uses plastic to buy things their bank account cannot afford. This Frontline report is a real eye opener; it reveals eight things every credit card user should know. Well, that’s the title, but in reality there more than just eight things about credit cards that consumers should know.
One of the most important credit card lessons that can be learned is the importance of universal default. What is universal default? Universal default gives credit card companies the right to raise the interest rate on your credit card—not because you were late with a payment to them—but because your house payment was one day late or your student loan payment got lost in the mail or your car payment was delayed due to an emergency. The credit card industry was essentially granted nearly unlimited authority to raise your already interest rate without cause and without even informing you of their decision in plain English.
The second most important lesson to be learned from this Frontline report is to read the fine print on your credit card statement. Of course, there is a fine line between reading and comprehension, and unless you are a lawyer, you may as well allow your dog to translate the fine print of credit card contracts for you. You do not have the right to take a credit card issuer to court to resolve disputes; you don’t even have the right to a class action suit. Instead, all disputes with a credit card company must be resolved through the process of arbitration. If there are two interest rates on the account, guess which one the payments will go toward paying off first? Yep, the higher interest rate will continue to accrue forever, or for at least as long as the lower interest rate is not paid in full.
Among other elements of Frontline’s report worth considering are the fact that there is literally no cap on the amount of interest a credit card issuer can charge, and laws were changed under the Bush administration that create more difficulties in discharging massive credit card debt by filing for bankruptcy.
Even the best student credit cards have pitfalls. Don’t forget: Choose wisely, and use wisely.
