If you aren't reading your credit card's fine print, you probably don't know about most of these.
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When you're comparing credit cards, you probably check out their rewards, fees, and APRs, and if you're smart, you'll read through their cardholder agreements. But even all that won't tell you the full story. There are a lot of things that credit card companies don't advertise that can affect your experience as a cardholder. Here are four of the most important card issuer secrets you should know.
1. Your interest rate can change at any time
A card issuer may advertise an APR or APR range for a given card, but these interest rates aren't set in stone. There are several reasons they could change. Some cards offer an introductory 0% APR to new cardholders for 12 to 15 months, and when this period ends, the card's APR automatically switches to a more standard APR. Some cards also charge a higher penalty APR to cardholders who make a late payment. The card issuer may also simply re-evaluate its rates and decide to raise them.
Most credit cards' interest rates are tied to the prime rate, which is a measure that banks use to determine the lowest interest rate they will offer to borrowers with excellent credit. If the prime rate rises or falls, your credit card's interest rate could change as well, and the card issuer isn't required to notify you so long as it discloses this possibility in its cardholder agreement.
Your card company also doesn't have to tell you if your APR increases due to a late payment or a promotional period ending, assuming again this is outlined in the cardholder agreement you accepted when you signed up for the card. In other cases, you may get a 45-day notice of an impending increase. You don't have to accept, but if you choose to opt out, the card issuer will cancel your account.
2. A late payment on one card could affect your APR on other cards
Prior to the Credit Card Act of 2009, credit card issuers could slap you with penalty APRs if you had a single late credit card payment, even if the late payment was on a completely different card. The passage of the 2009 law has curbed this practice, but it hasn't eliminated it entirely. While one card issuer cannot charge you a penalty APR because you made a late payment to a different credit card issuer, it can penalize you across all of your cards with that issuer if you make a single late payment.
For example, if you have three credit cards with the same card issuer and you make a late payment on one of them, the issuer could enact a penalty APR across all three cards, even though you've only ever paid late on one card. The simple way around this is to make all your payments on time and avoid charging anything to your cards that you know you can't pay back in full at the end of the month. But if you're already in credit card debt, this is something to be mindful of.
3. Balance transfers and cash advances are more expensive than you think
You've probably heard of balance transfer cards with an introductory 0% APR to help those with credit card debt pay down what they owe. This can be a good way to get your debt under control, but you should know that it's not free. You typically must pay a balance transfer fee, and this can be up to 5% of the balance being transferred, leaving you with a larger amount to pay back. Make sure you read the cardholder agreement and understand exactly how much the balance transfer will cost you before going through with it.
Cash advances also have fees, which may be either a dollar amount or a percentage of the advance you're requesting. In addition, cash advances may be subject to their own, higher APR, and they begin accruing interest immediately, unlike purchases. This can lead to a slippery slope of credit card debt, so think carefully before going through with it.
4. You have more power than you think
Credit card issuers are in a very competitive business, and staying profitable means keeping customers happy. If you have good or excellent credit -- typically considered a score of around 700 or above -- and you don't like something about your credit card, you could easily take your business elsewhere. To prevent that, card issuers are willing to negotiate with you on things like APR, credit limit, payment due date, late and annual fees, and even rewards.
Your negotiating power is tied to your credit score, and those with poor credit or a history of late payments may find card issuers less willing to work with them. But if you've been a responsible borrower and have a good credit score, it's worth calling the card issuer to see what kind of deal you can get. Outline what you want and don't be afraid to bring up comparable cards to demonstrate what you think you deserve. Highlight your loyalty to the card issuer if you've had the card for a long time. If you still don't get what you want, consider making good on your threat and switching to a different credit card.
Before you sign up for a new credit card, always read through the cardholder agreement and reach out to the cardholder if you have any questions about its terms or if you want to negotiate anything. It pays to do your research, because any misunderstandings could cost you later.
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