Since it is a given that the credit card industry cooperates with one another to manipulate the debt burden of the American public, it is essential to be aware of their dirtiest secrets. The majority of middle class American citizens possess roughly eight credit cards and average about $9,000 in credit card balances. Therefore, knowing how to combat the credit card companies’ dirtiest secrets is a tremendous advantage when it comes to your financial future. Here are five of the most popular methods credit card companies employ to keep building the public’s personal debt.
The Dirtiest Secrets Revealed
- Minimum payments are like treading water. Decades ago the smallest monthly payment amount was determined with a 5 percent interest rate. This encouraged people to pay their balance in full each month so they could evade big interest payments. That’s when the industry changed course and switched to a 2 percent standard. When people pay less each month, they spend more and add tons of interest to their balance.This shady strategy extended the time to pay off their balance by ten to twenty years in some instances. You have to admit it worked like a charm!
- Don’t miss a payment. This does not apply just to credit cards but for your house payment, phone bill, utilities, car insurance and cable. The Universal Default Clause is a pesky regulation where if a payment is missed or even late, your annual percentage rate can be as high as 25 to 35 percent. How do they get away with that one? This is certainly one of the credit industry’s dirtiest secrets!
- The sky is the limit for late payment fees. There is no legal recourse for consumers to fall back on limiting late fees. This means the industry can arbitrarily establish whatever fee they want and it does not depend on how late the payment is. The great news is many financial experts feel that with this kind of freedom, credit card companies will increase these fees in the near future.
- The government has not introduced legislation regulating interest charges. That is just crazy but it is absolutely true. Although many other industries are policed by those types of laws, it seems just insane credit card companies get away with this. They even take further advantage of the situation by setting up corporate headquarters in states that have no laws or laws that are not enforced to protect consumers from high interest rates. Take a look for yourself where the 10 largest credit card companies are located.
- There are occasions where you pay interest more than once during a billing cycle. This not-so-cool scenario is referred to as two cycle billing and is also not regulated by laws. For example, you pay off the entire amount you owe within 30 days, but the next month you decided to carry a small balance. Credit card companies can and do have their hands out for not only that month’s interest charge, but also for the previous month when you eluded an interest payment. If they can’t get you one way, they grab you in another! How’s that for one of the dirtiest secrets credit card companies employ?
Are These the Dirtiest Secrets?
Unfortunately, this is only a short list of the credit card industry’s dirtiest secrets. They have a number of tricks up their sleeve to keep Americans in debt and it does not seem the federal government will be lending consumers a hand anytime soon!