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The Ten Sneakiest Credit Card Tricks

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In my review of the credit card industry, I have come up with what I consider their sneakiest tricks... in no particular order:

1. Card offerings that suggest a specific credit line or interest rate but minimize the fine print "UP TO" so that a responder takes the time (and authorizes a credit check) under false pretenses (because, for example, the credit line or interest rate is only for FICO scores of 800 and above).

2. Card contracts that are so NOT plain English even Harvard Law Professors (like national credit card expert Elizabeth Warren) don't have a chance at understanding them.

3. Applications that reference "FIXED" rates when in fact the only thing fixed about these rates is that they do not float with an index (like the prime rate) YET since these rates can be changed AT WILL by the card company, they are far from FIXED by any normal interpretation of the word.

4. Cut-off times (e.g. noon) which cause payment to be deemed "late" EVEN IF the payment is received on the due date (but after noon).

5. Credit line reductions which come disguised as junk mail so that cardholders unknowingly exceed their credit line and thereby incur over-the-line fees and penalty interest rates.

Similarly, grace period reduction notices which come with a monthly bill (also disguised as "junk") so that anyone who pays on the same day every month will be likely to be late, thereby incurring late fees and penalty rates.

7. Double cycle billing procedures which calculate interest due on the average of two prior balances even if one of the two balances has been paid as of the date of the new bill.

8. Punishments which "do not fit the crime:" the imposition of significantly higher interest rates (sometimes double) when a card holder is one day late.

9. Misallocation of payments - when a card holder has balances with different rates, most card companies will apply any partial payment to the lowest-rate payment. So, if for example, a card holder who has a 0% balance transfer rate (with a $1,000 balance) and a 15% rate for all other purchases, charges $500 and then makes the payment on time, many card companies will apply the $500 against the 0% balance and leave the $500 charges alone, accruing interest at 15%.

10. Invoice timing which study payment patterns concluding for example, that most people pay their bills the first week of every month and then send bills (with calculated grace periods) with due dates that end right before the first of the month inducing late payments.

As I was preparing this list I thought of more than ten sneaky tricks but decided to end here and ask readers to send me their suggestions for future lists.


Jim Randel
is the author of The Skinny on Credit Cards (RAND, 2009) available at or Amazon.