Even though credit card companies are required to inform you of your interest rate, payment due date, applicable fees, and a host of other caveats, your contract with an issuer – commonly called a Credit Agreement – is actually a flexible document. This works in your favor in some cases (see #4, #5, and #8 below), but works in the issuer’s in others. These credit card secrets can wreak havoc on your financial life.

The worst part about a credit card secret is that it can impact you at any time. Issuers can decline or even cancel your card, raise your interest rate with minimal notice, or start charging fees, all completely legally. Plus, although all fees must be disclosed, that doesn’t mean that they have to be disclosed in plain language, or even in plain sight. Find out about these sneaky fees and when they are applied check out my guide to credit card fees.

On the other hand, this flexibility can benefit the consumer. I was fortunate to learn early after receiving my first credit card just how flexible credit card companies can be – including waiving late fees. I called my card issuer once when I forgot a payment; a car accident early in the month and the resulting hectic days involving getting a rental car and working with the mechanic threw me off schedule. Not only did they waive the fee, but they offered to extend my payment date.

The Top 10 Credit Card Secrets

These credit card secrets really shouldn’t be a secret, which is why I’m bringing them out into the open. Watch out for these sneaky practices:

1. We can cancel your card at any time. Even though you have an agreement with the credit card issuer, the issuer can cancel your card at any time. If you have a history of late payments, high credit utilization, or even if your annual income decreases, the issuer might take a second look and decide to bar you from further credit – even if you’re below your agreed credit limit.

2. We can also decline you at any time. Even if you have more than enough left on your credit limit to cover a purchase, a card issuer can choose to decline the card when it is submitted as payment. If they’ve had fraud problems at a certain retailer, a purchase is higher than typical, or you’re even just out of your usual local area, a credit issuer might not accept the charge, leaving you stranded at the register.

3. Your fraud protection isn’t as good as you think. There are all types of limits that issuers place on fraud protection, especially the protections that are included free with the card. If you don’t report fraud within a certain time period, or if you verbally authorize someone to use your card to run to the grocery store and they stop at Tiffany’s on the way, you could be on the hook for the charges.

4. Late fees are negotiable. If you have a history of on time payments and miss one payment because of a busy month, most issuers will just waive the late fee if you call and ask them to (nicely, of course) as soon as you realize you missed a payment.

5. You can get a better deal if you ask. If you have a high credit score, or an average credit score but a long history with a particular credit card issuer, chances are very good that the issuer will increase your credit limit, lower your interest rate, and throw in additional benefits. The key is that you have to ask for these perks; telling the issuer about other deals you’ve seen or thoughts you might be having about cancelling the card will give you added bargaining power.

6. There’s no limit on the interest we can charge. For the first year you hold a new card, the Credit Card Accountability, Responsibility, and Disclosure Act prohibits issuers from raising your interest rate, but after that, the sky’s the limit. As long as the interest rate does not break your state’s usury laws, an issuer can raise the rate at any time after the first year.

7. Two cycle billing will put you further behind. Two cycle billing is the practice of charging two months’ interest on one months’ balance when you usually pay in full, but the last payment does not cover your balance in full. This happens if you switch from paying in full to carrying a large balance.

8. You can pay more quickly at a branch. Although credit card issuers prefer to receive payment online, if you pay your balance at a branch location for that issuer, you don’t have to pay a convenience fee and your payment is usually credited the same day.

9. When introductory rates expire, the higher rate is retroactive. If you sign up for a teaser rate with a credit card, you had best pay the balance in full before the teaser rate expires. In many cases, the higher rate that comes in once the teaser rate expires is retroactive to your first purchase, meaning you can be charged interest over 6 months’ or more worth of purchases – all at once.

10. You might not have a grace period. Not all credit card issuers calculate interest on a monthly basis. Those that calculate on a daily basis will charge interest for purchases made during a billing cycle whether or not you pay in full and don’t carry a balance into the next month.

Avoid becoming a victim of credit card secrets. Your first step is knowing how to read and understand your statement, and reading this article on understanding statements will help arm you with the terms and explanations you need to know. Next, read your credit agreement carefully to understand how and when the above credit card secrets might sneak up on you – and switch cards if you foresee a problem.

Have you been a victim of any of these credit card secrets? Share with us in the comments section below.

About LMcpherson

Laura is a personal finance blogger with Stumble Forward helping people avoid life's financial mistakes and live a higher quality financial life.

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Comments

  1. I’ve messed up in the past with our credit card and when I called them to explain they removed the interest charge simply because I was a good standing customer. It doesn’t hurt to ask and don’t be afraid to explain a situation they may just understand.

  2. Christopher says:

    I totally agree Mr. CBB Sometimes asking is all you have to do. However it does help that you are a good standing customer. Thanks for stopping by.

  3. There are so many different things cc companies can do. You need to read your terms and never be afraid to call.

  4. Thankfully I’ve never fallen into any of these, but the cc companies have many tricks up their sleeve. It’s important to look at the terms and know the high level basics and never be afraid to call and ask for something.

  5. Christopher says:

    That’s a great point Grayson, I remember a few years ago calling my CC company because I noticed a fee on my bill that was charging me a percentage of what I spent to cover me in the event that I couldn’t afford to make my payments. It was almost kind of like PMI but for credit cards. I argued with the representative for 30 minutes to remove the fee. It’s ridiculous what CC will do to get money from you sometimes.

  6. Christopher says:

    Another good point John. Reading the terms might be boring but the truth is CC companies are coming up with new ways to hit people with fees all the time. I don’t think this will ever stop no matter what kind of laws are government puts in place to protect us because the credit card companies will just come up with new ways to hit us up with another fee. Thanks for the comment.

  7. Ohhh…………good ones! I don’t trust them at all. Thankfully, I just use my cards for rewards and pay it off a couple of times a month.

  8. Christopher says:

    It’s crazy how credit cards can take advantage of so many people. On the other hand it’s great to know that someones taking advantage of the credit card companies for once, I think that’s awesome. Thanks for the comment Holly.

  9. I never knew late fees were negotiable. Not to brag but I’ve always paid on time so didn’t have to deal with this. Good to know though.

  10. There are so many things that they can do. Great list!

  11. Christopher says:

    Hi Michelle. You are defiantly right about that, it never amazes me to see what these companies will try next. Thanks for stopping by.

  12. Christopher says:

    I’ve always paid on time as well John and I’ve never had a late fee either. However if it would ever happen I would call them ASAP to see what i could do. Thanks for the comment I really appreciate it.

  13. I hate #2. Since I travel a lot and often forget to tell my CC company, they block my card usually at the worst possible moment, when I have no cash left and need to buy a bus ticket or something important. Then there is the international call to revalidate the card, because of course they can’t do it over the web. Can’t blame them for being cautious with fraud but it is annoying.

  14. Christopher says:

    That would be annoying Pauline. Since you are a big traveler I can see how that would and could be a costly ordeal for you. I know credit card companies keep pretty close tabs on peoples spending habits and when they see something irregular they will either lock the card or they will call you immediately to validate the purchase in most cases.

  15. Some of these points I knew about, I’ve had the banks arbitrarily raise my rates from as low as 5% to as high as simply 24%, simply because they could. I also had one card with a major hotel that I used for business travel and of course, to get points with that chain. That card went from no fee to a $100 annual fee so I took the credit report hit and canceled it. What concerns me the most on this list is that they can, on a whim, cancel your card. That would have a negative impact on your credit score which could lead other lenders to raise your rates.

  16. One thing that kinda irked be recently about American Express is that they reduced their rewards program on their Blue Cash Preferred card!

    We always call every 6 months to request a credit limit increase on all of our cards though!

  17. Christopher says:

    I agree Jose this is a pretty dirty trick credit card companies play when we aren’t playing their game. I know it can hurt your credit but I think we can get the better of the credit card companies by dropping them instead of opening our wallet to them for a $100 annual fee. Thanks for stopping by and sharing your thoughts I really appreciate it.

  18. Christopher says:

    I’been seeing this as well Johnny. I use to have a Master Card Marathon Gas card that was paying 5% cash back on all of my gas purchases. Then out of the blue they stopped offering it and forced to a new program with Visa. So we had to cancel our cards and switch to a new program that gives half the reward as the old program. Thanks for sharing your thoughts.

  19. I had one credit card that did two-cycle billing. I would pay the amount in full every month but never really look at my statements in detail. I’ve since learned to read the fine print. The credit card company was placing the interest on top of my balance before I had the chance to pay it in full. There was no such thing as a grace period. I got rid of that credit card and years later received a letter stating illegal practices – wasn’t the two cycle billing. They were purposefully not posting payments on time because of “backlog” and charging consumers late fees.

  20. Christopher says:

    That sucks to hear that Jason. It’s hard to trust these companies when they do things like this to the consumers that use them. Luckily you were able to spot the problem and ditch the card. Thanks for stopping by.

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