Credit Card Companies – Is it Bait and Switch to Get Your Money
Over on Blogging Away Debt, Tricia shared how high her credit card companies were willing to go on your credit card limits without putting her annual income into the mix. When all was said and done – her annual income of around 40K and steady payments got her a grand total of over 70K in credit line for her credit cards. Proof there is something very wrong with the credit card industry?
Yep – In my opinion, it is a perfect example of how free some credit card companies are with their lines of credit. Of course, if credit card customers didn’t USE the credit lines then little would happen to upset their financial apple cart.
Credit card companies and student loan companies KNOW their return on approved loans and lines of credit. Whether the CEO of any of these credit card companies will admit it – they are not gambling with their money. They are making a judgement when they raise the credit line of an individual. Credit card companies are NOT in the philanthropy business. Credit card companies make their money on annual percentage rates, over the limit fees, annual fees and cash advance fees. Of these – annual percentage rates that can be raised arbitrarily are their Ace in the hole. If they are not generating enough from you as a credit card customer they will increase your annual percentage rate. That is the bottom line.
Of all the credit card applications that fly through my mail box for myself or my adult kids – I have yet to find one that does not contain a phrase similar to this – “We reserve the right to change the terms of this agreement (including the Annual Percentage Rate) at any time for any reason…”
Think about it – it’s like loan sharks.
They offer you 0% transfer balances and low APR for the first year – two years… it doesn’t matter – once you activate and use that credit card – the credit card company CAN and most likely WILL change the terms of your agreement at some point down the road.
It may slip out from under the definition of the Bait and Switch but if you look at the terms of the credit card offers YOU get in the mail – credit card companies are coming pretty darn close to doing just that.
They offer their best rate and terms but you end up with alot less than what they promised when they offered you a higher credit line or lower annual percentage rate.
Keep your money in your pocket, not theirs…
Tammy
Tags: blogging, credit card, credit lines, debt, money
