Credit cards can be used in many ways to improve an individual’s living situation, or enhance the investment capabilities of a small business. However, there are also many negative financial consequences that can transpire as a result of using a credit card irresponsibly.

Unfortunately the line between negligence on behalf of the cardholder, and trickery on behalf of the credit card company, is becoming increasingly narrow with each passing year. Credit card companies generate profits by charging exorbitant fees, penalizing cardholders whom are entirely unaware of the impending fee in most cases. Fortunately, simple awareness can completely prevent almost any fee or other financial trouble that is associated with credit cards.

How Did My Interest Rate Change?

This is the question on the minds of many credit cardholders, as they glance at their new statement and realize that their interest rate is now 3 points higher than it was when they applied for the card only several months before. There are two very different types of interest rates – fixed and variable. While it may seem as if a fixed interest rate cannot change,  based on the implications of its name, the reality is that both fixed and variable rates can change at any time. The only difference between the two is that fixed interest rates cannot be changed without a two week notice.

How Do I keep the Interest Rate From Rising?

Fixed interest rates are preferable because they are not likely to change, and when they do, an adequate warning is issued. Unfortunately, card applicants cannot choose whether or not they would like a fixed or variable interest rate, because it is decided based on their credit score and several other factors. When an interest rate changes suddenly, there are two possibilities – the grace period has ended, revealing the true interest rate of the card, or the interest rate of the card has risen because of problems with the economy or the individual’s credit score. The best way to prevent the interest rate from rising is to keep a good credit score and only apply for cards with a fixed interest rate.

Why are There So Many Fees for My New Credit Card?

Aside from charging interest, the credit card companies make the majority of their money charging fees. These fees account for billions of dollars spent cumulatively by cardholders around the world. Most credit card companies do their best to conceal the important terms and conditions without placing it out of the cardholder’s sight. Although they are legally required to disclose this information, they are not required to make it obvious, or easy to understand. It is important to enquire about and understand the terms and conditions surrounding the following fees when applying for a new credit card.

•    Late Payment Fees
•    Annual Fees
•    Foreign Transaction Fees
•    Cash Advance Fees
•    Inactivity Fees
•    Paper Statement Fees
•    Reward Recovery Fees

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