9 Credit Card Facts Probably New to You

Do you feel as though you are an expert on your preferred credit card? Rethink that.

The card may still have some surprises in store even after you’ve had it for a while. Credit card rules are subject to frequent revisions, sometimes as a result of new laws or regulations taking effect, and sometimes just as a result of card issuers wanting to make updates. For example, depending on your situation and/or the card issuer’s, interest rates and credit limits may increase or decrease. There are also the unique details that you might have missed.

These nine credit card facts are likely new to you:

Fact No. 1: Interest on your credit card is subject to change

Enjoying a low annual percentage rate (APR), you’ve signed up for a high-quality credit card.

However, many card issuers have the unaccountable ability to raise interest rates as high as they’d like. This is a frightening fact.

Due to their federal chartered status and freedom from state laws governing interest rate caps, the top 10 credit card issuing banks can set their own interest rates at any level.

By the Credit Card Accountability, Responsibility, and Disclosure Act, also known as the CARD Act, your interest rate is only guaranteed for the first year—or, if it’s a teaser rate, the first six months. Additionally, that protection is nullified if you miss a payment by 60 days.

Most credit cards have variable rates, which are linked to an index and may rise in tandem with the index. However, just because your credit card has a fixed rate now doesn’t mean it will in the future.

Card issuers can change not only your interest rate but also how it is calculated, according to John Ulzheimer, a former president of consumer education at SmartCredit.com who is currently a credit-related litigation expert witness and legal consultant. Ulzheimer thus states that a card with a fixed rate may eventually become a variable-rate card.

Due to the CARD Act, there are two disclaimers: The issuer must provide you with 45 days’ notice before any interest hike, which will only be applied to new charges (your current balance will be assessed at the old rate).

Positively, your higher rate might not last indefinitely. Your rate may drop again if your issuer increases it following two months of late or nonexistent bill payments.

The issuer is required by the CARD Act to evaluate your account every six months. The issuer may reset the APR to the rate you had before the penalty if you have demonstrated responsible card usage.

Fact No. 2: You have the option to decline a change in interest

Under the CARD Act, you have the right to respond, “Thanks, but no thanks,” if your credit card issuer raises your annual percentage rate.

You may be able to work out an agreement with the company to maintain your current interest rate, but you will need confirmation in writing.

But remember, according to Ulzheimer, there’s also a chance the issuer will lower your credit limit, raise your minimum payment, or even cancel your credit card.

The issuer is not permitted to demand immediate payment of the full amount due. You should still have a few years to pay off your balance at the old rate if you reject the new one.

Fact No. 3: Your purchases are protected by your credit card

Something you ordered online never shows up. The delivery does not match your online order. Your bill appears with a charge that is not yours. Your credit card has your back, so don’t worry.

Certain consumer rights that come with credit cards can provide strong protection.

For example, federal law limits liability for unauthorized purchases made with a credit card that is lost or stolen to $50; however, most credit card issuers offer some form of zero-liability policy to safeguard their customers. Regardless of the issuer’s policies, you are not legally liable for any charges you did not authorize if you report the loss before your credit card is used.

Additionally, cardholders may refuse to pay their credit card issuers for an unsatisfactory purchase under the terms of the Fair Credit Billing Act. The purchase must be made within 100 miles of your home, and the charge must be at least $5. Additionally, you had to have tried to work things out with the seller first.

Apart from federal rights, certain cards provide:

• Return protection
• Protection against lost or broken goods
• Extended warranties

See which protections your card offers by reading the terms and conditions. Sometimes, being aware of these little-known facts can save you hundreds or even thousands of dollars.

Fact No. 4: In other countries, your card might not be accepted

Make sure the card you bring will probably be accepted abroad when you travel.

Note that some of your cards might not work when you travel overseas. In certain locations, cash is still the preferred payment method, so even though Visa and Mastercard are reliable options, you might occasionally need to rely on them.

In addition, you ought to notify your credit card company ahead of time of your overseas travel itinerary. Otherwise, in case of fraud, the issuer might temporarily revoke the ability to charge.

Fact No. 5: You might be able to change your card’s status without submitting a new inquiry

Are you eyeing a new credit card?

Maybe you want to take advantage of better travel benefits or increase your cash back. Perhaps you wish to switch to a less expensive plan because you’re sick of paying a high yearly subscription. In any case, you might be able to switch to a different card from the same provider and keep your credit report from being subject to a fresh hard inquiry.

Usually, when you apply for a new credit card, your credit is hard-pulled by the issuer. Your credit score may be slightly impacted by these hard inquiries, particularly if you intend to apply for a mortgage or other loan soon. You can prevent a hard inquiry and short-term damage to your credit score by upgrading or downgrading cards from the same issuer.

Fact No. 6: It can be challenging to figure out card balances

Understanding how credit works will help you to keep your credit utilization ratio (the percentage of your total credit limit that you use) low and pay off your card in full each month.

Make it a point to never carry a balance by paying in full before the payment due date to establish or preserve good credit.

Lenders may not be receiving that information from your credit report, though. Why is that?

The issue is that credit card companies typically report within a few days or even weeks of the billing cycle ending, which is when your payment is due.

Therefore, the amount you owe will appear on your credit report if you haven’t paid your bill by the end of the billing cycle. Your credit score may be negatively impacted if the amount is large—more than 30% of your credit limit.

If you pay your card in full and it gets reported during the next billing cycle, this might only be a small problem. On the other hand, an unexpectedly high credit card balance on your credit report could be detrimental if you’re getting ready to apply for a large loan, like a mortgage.

It’s best to be aware of your credit card balance at all times and to pay it off as soon as the transactions post to prevent that.

Fact No. 7: Repercussions arise from late payments

If you receive your payment after the statement due date, your bill will be considered late. This implies that you might be assessed a late fee by your credit card company. Thus, your credit is also damaged, correct?

Nope. According to credit bureau reporting guidelines, your issuer cannot report a late account to the credit bureaus until the bill is thirty days past the due date. Furthermore, the CARD Act states that it cannot increase your rate unless you are 60 days or more past due.

Fact No. 8: If you are having financial difficulties, your issuer might be able to help you

Your credit card issuer might be able to assist you if financial difficulties prevent you from paying your credit card bills.

For customers who are struggling financially, several issuers provide credit card hardship programs. These programs might be able to assist, in lowering your interest rate, temporarily waiving some fees, and more, if you qualify.

Being organized and moving quickly are essential to obtaining relief from your lender. Get in touch with your credit card issuer right away if you are unable to make the minimum payment. Be ready to explain to them why you are unable to make the payment, how much you can afford, and when you plan to resume making your regular payments. Many issuers might be willing to work with you until your financial emergency passes, though this is by no means a guarantee.

Apart from contacting your lender for assistance, you might want to think about having a conversation with a credit counselor. A credit counseling service can guide you through the process of getting your finances back on track and assist you in developing a plan for paying off your debt.

Fact No. 9: Credit card companies may pay to maintain your account

There are instances when a specific credit card works well for you, and then it doesn’t. It’s not good for your credit to close a card, and you might not be thrilled with your options for a new product.

Thankfully, there might be an additional option. A retention offer is one way that certain issuers can persuade you to keep your card.

The issuer of your credit card may offer you a perk to convince you to keep the card if you call and tell them you’re thinking of canceling because you don’t want to pay the annual fee or the rewards don’t work for you anymore. Your annual fee might be lowered or waived. Bonus points or statement credits might even be awarded to you.

Naturally, there is no guarantee of this. While some issuers are renowned for their generous retention offers, others hardly ever offer them. Furthermore, card issuers are more likely to make an effort to retain customers who regularly use their cards.

It doesn’t hurt to call and inquire in any case. Be careful not to indicate that you’ve already chosen to close the card. Say you’re thinking about it. If not, a representative might simply offer to shut the card on your behalf.

Conclusion

Beyond the terms and conditions of your credit card, there’s more to know about it. The greater your knowledge of credit cards, the more advantageous they will be to you.