Most consumers are aware of the importance of their credit report. This document, offered to consumers and lenders by the three major credit bureaus, offers a fairly complete list of financial transactions and debts incurred by a consumer. Lenders examine the report, along with the associated FICO score, to determine whether a consumer is worthy of receiving additional credit or loans. What many consumers may not know is that credit card companies regularly check their credit reports, and unfavorable entries may result in a higher interest rate on their credit cards.
We have previously noted that many credit card companies employ something known as a "universal default clause" in their terms of service. This clause allows the company to raise interest rates on the customer's card if the customer pays bills late. A late payment to the phone company could result in a higher interest rate on the Visa card. Most companies also allow themselves the latitude to raise their customers' interest rates for any reason at all. With this in mind, the credit card companies tend to run occasional credit checks on their customers, often raising rates if they notice any activity that, in their opinion, makes the customer a higher risk. This might happen even if the customer has a history of paying his or her credit card bills on time.
The sorts of things that may create a "risky" client include taking out additional loans, additional credit cards, or building balances on existing cards to at or near their limits. The companies justify this activity by saying that consumers who do these things create greater risk for the lender, and these costs must be passed on to all of their customers. The problem for the customer is that these higher interest rates are often assigned without warning. The new rate applies to existing balances, too. An interest rate hike today could mean that the television you bought last fall has suddenly become more expensive.
What can consumers do? Keep an eye on your credit card bill and your credit report. You can receive a copy of your credit report, for free, at http://www.annualcreditreport.com. As for your credit card bill, watch the interest rate. If it abruptly changes to a higher rate, call your credit card issuer and ask them about it. They will often reduce the rate if you call and complain. If not, your only option may be to shop around for another card.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to establishing credit, debt consolidation and credit counseling.
I have been a loyal user of Quicken(R) for more... Read More
Recent security breaches at several credit card companies continue to... Read More
Just about everyone has a checking account. Checks present easy... Read More
Gas prices have soared to unimaginable heights of late. Since... Read More
Good money management needn't be difficult. In fact, there a... Read More
Millions of people give a lot of thought to financial... Read More
Many people spend their little income haphazardly without any planning... Read More
If you die without making a Will in the UK,... Read More
If you've been to a shopping mall lately, you've probably... Read More
Most Americans have been brought up to be concerned about... Read More
Holy Shenanigans! More STUFF?Loosing one's business due to lack of... Read More
Did you know that 43% of all married couples argue... Read More
Are you having problems with debt? Are you afraid to... Read More
Budgeting. It's a word we're all familiar with. Everyone knows... Read More
You've analyzed your past expenses, put them into spreadsheets, loaded... Read More
My personal opinion is that in today's new economy, it... Read More
The price of gas continues to climb, and with continued... Read More
Confused about whether you can contribute to a Roth IRA?... Read More
The cries are heard from the distance, "I need help... Read More
Finding a stable and secure income that will come year... Read More
With a traditional Investment Retirement Account (IRA) you pay taxes... Read More
If you are the normal consumer, then you've probably experienced... Read More
Do you struggle from week to week trying to make... Read More
How many drawers did you have to look through to... Read More
Sorting out your personal finances can be a tricky and... Read More
This investment retirement account (IRA) is useful to you as... Read More
If you're like most people, your personal financial records are... Read More
If you want money you need to learn how to... Read More
Between 15 - 20% of people in our country (UK)... Read More
Sticking to a budget can be difficult, but with so... Read More
Now there are ways to save money in the grocery... Read More
Saving money is not easy and is made more difficult... Read More
We all know that money doesn't grow on trees, but... Read More
Sorting out your personal finances can be a tricky and... Read More
The first step to financial success lies in knowing your... Read More
Reducing the clothing budget was a serious challenge for me.... Read More
Developing and living by a household budget is by far... Read More
Most Americans have been brought up to be concerned about... Read More
Everyone needs to maintain their lives. What I mean by... Read More
With almost two thirds of university entrants from England and... Read More
Did you have a piggy bank when you were a... Read More
There have been an estimated 9.9 million victims on America... Read More
Christians are called to be good stewards of God's resources.... Read More
Of course, these don't have to be done in any... Read More
It is estimated that we, as consumers, waste an average... Read More
As a parent you are bound to face a few... Read More
Vacations Made Easy: Buying a Florida Investment PropertyA relaxing beach... Read More
Before buying personal or business checks you should inform yourself... Read More
There is a new bill that is being passes, it... Read More
You no longer look at the pictures of homes cause... Read More
Many people spend their little income haphazardly without any planning... Read More
It's the little things in life that make it interesting.... Read More
Investing is a subject a lot of people don't want... Read More
An avid cyclist and bike racing fan, I sit transfixed... Read More
I'm still amazed every time someone comes to me complaining... Read More
If You Have an Existing Account and 5 Minutes, You... Read More
I think most of us have at some point in... Read More
The lists of bank and savings accounts that are available... Read More
The British government at the beginning of this year officially... Read More
When people speak about the increasing age expectancies, they generally... Read More
Identity theft is a serious crime that continues to grow.... Read More
The Check 21 Law is the new federal law for... Read More
Recently, many of these loyalty rewards programs have come to... Read More
Each of us knows how to spend money, but do... Read More
**If it's Spam, it's a Scam!- If it sounds too... Read More
Our global society has had a wake up call in... Read More
Personal Finance |