11 Dirty Credit Card Companies Tricks To Beware

Last Updated: August 21, 2019
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Credit card has a lot of beneifts - if you know how to use it the right way. The problem is a mix of things, like fees that are overwhelming, changes to the terms of the contract and a whole lot of underhanded dealings that credit card companies use to get your money. What are the most common tricks and how can we avoid them?

Any consumer wants to get the best deal they possibly can and any business wants to make some type of profit, but in most interactions, the business and the consumer react in a relatively fair manner. When it comes to a credit card company and a credit user, however, that’s not usually the case.

When it comes to credit card companies they tend to pull in customers and then do whatever they can to get a whole lot of money out of them, without giving them much of anything in return.

Let’s take a look at some of the tricks that the credit card companies are using the most.

1. Cash Advance Fees

Cash advances can cost consumer hundreds of dollars, simply because they don’t read the fine print and yet credit card companies continue with this.

The problem is that credit card companies typically charge not just the fee, as much as 5% or $10, whichever is the higher amount, but also very large interest rates. Those interest rates usually provide absolutely no grace period (unlike traditional credit card charges) and this racks up charges quickly.

Many people end up taking out cash advances without even realizing it because they never read the fine print. That fine print, however, says that if you make certain types of purchases with your credit card then it’s treated immediately as a cash advance, things like gambling and bail bonds or even money orders are treated this way often.

For those who do need to take out cash advances or do so intentionally, it’s important to look at different cards and see what the cash advance terms actually are to get the best possible deal.

2. Sign-On Bonuses, With Too Many Conditions

Many people love the sign-on bonuses that are offered by credit cards. People can often get a hundred dollars or more or thousands of airline miles only for signing up. The problem, however, is that there’s always something hidden.

One of the most common ways that credit card companies choose to offer these types of bonuses is by requiring a specific amount of money to be spent on the card within a specific amount of time. Sometimes it’s $500 in a month, or even more. Of course, it’s not always exactly like this, but in general, it can be very hard to actually achieve the requirements.

Another way that credit card companies get business is by offering a higher percent back, but it’s usually only available from specific retailers or institutions rather than for just anything. That means you don’t get much back, and especially if there are limits to the time period or to the amount that can be earned, even if you do manage to hit the right categories.

Rewards cards can seem like a great idea because you get something back for your purchases. Unfortunately, in order to get those rewards, you have to spend even more money. As a result, people tend to spend too much to get the rewards they want, creating an endless circle.

If you’re interested in rewards cards you should definitely look at the different options first. You can even check out our list of the best credit cards.

3. Credit Limit Reductions Without Notice

Anyone who signs up for a credit card is given a specific credit limit. Unfortunately, you’re not required to be notified if your credit limit is lowered and credit companies are allowed to lower them whenever they want according to the fine print. What’s really bad is that your credit limit can be lowered enough to actually put you over the limit and when that happens you get charged fees immediately.

For people who can’t afford the amount that it costs to get back under the limit, it turns into a huge problem where the debt continues to pile on. Keeping your cards down as much as possible is the only way to avoid this.

4. “Attractive” Offers

Who doesn’t feel special when that credit card application comes in the mail? After all, they stamp all kinds of things on the outside to make it look special, it’s ‘confidential’ and ‘important’ after all. Then you open up that special envelope and find out you’ve already been pre-approved! What could be better?

But being preapproved doesn’t mean you already have the card (that one in the envelope is fake, after all). It means that you still need to apply for the card and get fully approved, like if they’d never preapproved you at all.

Just because a credit card looks like it has a great thing just for you doesn’t mean that it’s actually anything special. Take a closer look.

5. One Payment Late, Two Big Fees

Have you ever looked at the fine print on your credit card to see what they actually charge you when you’re late on a payment? It could be as much as $50. And then you could end up with a penalty rate just because you were late. That rate may kick in at 60 days late.

What happens here is that you’re not just paying a fee, you’re paying a completely new interest rate, instead of the one you used to have. And that penalty interest rate could be as much as 24.99%. That’s definitely not something you want.

So, how do you make sure that you’re not going to get stuck with that penalty rate? You need to watch carefully. You need to make sure that you know when your bill shows up and you definitely need to pay for it as quickly as you can, even at the beginning of the month. Or at least make sure you have a way to remind yourself before the due date.

6. Extra Fees

When you first signed up for that new card you probably looked at the rules and at least scanned over the fees, but the way the system is designed, it forces you to initiate a number of different fees and penalties for breaking a single rule.

Did you know that credit cards are even charging you now for canceling your card? The fee is still recent, but because people were recognizing all those excess fees and deciding to cancel their cards as quickly as possible the credit card companies and banks decided to make money on that as well.

Another fee you may find yourself stuck with is an inactivity fee. This fee charges you if you stop using your credit card for a particular amount of time. But even if you don’t have this type of fee, you’re going to want to keep track of this rule as well, and we’ll tell you why a little bit later.

7. 0%*  – Only If You Follow the Rules

This one always sounds great, because you get to pay absolutely no interest. But the way it really works is the company keeps careful track of everything you would owe if they charged interest from day one.

Then, if you don’t pay off every bit of the charge by the very last day of the deal you get charged interest from day one, on the total purchase price, not what’s left. Even worse, the interest charges are added into your balance, so you pay interest on interest!

8. Special Upgraded Cards

Who doesn’t like the idea of being able to say that they have a ‘gold card’ or a ‘platinum card?’ It sounds prestigious for a reason, and credit card companies have continued to add new types of special sounding cards to their list.

In the past these cards meant something and for some credit card companies maybe they still do, giving you different limits and rules, but nowadays they usually mean absolutely nothing.

What you should be looking at isn’t the name of the card. It should be things like interest rate, fees, and rewards. Take a look at our credit card page to find out about our top picks.

9. When is Your Payment Due?

Do you know when your card is due every month? Chances are you think you do, but the credit card companies can actually change your due date whenever they want, and that can screw up your entire plan.

That’s how you can get a late fee, even if your card used to be due on a specific day, if you’re only a few hours from the cutoff or if your due date is a weekend with no mail delivery. No matter the reason, the company charges you a fee.

10. Initiating a Balance Transfer

Is your credit card company one of them that sends out checks in the mail? That nice blank check with a special offer, like free interest for a set amount of time, seems great, but there are some things to watch for.

A lot of people think that these cards are a great way to pay off some of their other balances. But you may find that there’s a large fee, up to 5%, associated with actually using the check. Another negative is that you could miss out on something that would be bigger and better savings with a different credit card.

You could even end up with fees that are up to 3% of your total transfer amount, to make up for the 0% interest they charge.

11. Raise Your Interest Rate

Did you know that your credit card company can raise your interest rate whenever they want? They continue to look at your credit report so they can make a decision on what to charge you, and then they can update your interest.

Even if you’ve been late on a different card any credit card company can raise your interest rate. It doesn’t take much for a credit card company to start making changes to your account, and it’s all perfectly legal.