Chances are many of you have used a credit card this holiday season to make a purchase for someone on your list, but did you know there are some credit card gotchas that may be bleeding your budget dry?
Good Question: What are some loopholes I should look out for with my credit card?
Packed with penalties, loaded with late fees and statements that were hard to understand.
Consumers say their creditors were once the culprit, but then a gift from the federal government, sweeping credit reform designed to protect you.
Turns out, they left a few loopholes.
"The biggest gotcha that maybe most consumers aren't aware of is card issuers can raise your interest rates on new purchases going forward really for any reason," said Ben Woolsey with Creditcards.com.
While the interest rate on our existing balance can't be increased, your creditors can increase the rate of future purchases.
All they have to do is give you 45 days notice, but read the fine print, the increase starts 14 days after the notice is sent out.
That lack of information can leave you almost a full month of shopping at an increased interest rate before you know it.
"They really have the right to raise it as much as they want if you start to look too risky to them because ultimately they want you to pay their money back," said Woolsey.
Creditors also have the right to raise your minimum payment to an amount which would pay off your card in five years.
"They can close your account and demand complete payment at any time," said Woolsey.
The card act cut profits for creditors, income once generated by over the limit and late fee both which have been almost eliminated.
Consumers can now expect to see more creative fees imposed like inactivity fees, annual fees even monthly fees for non awards cards.
Bottom line credit card customers should keep a close watch on the mail for policy changes.
Credit card customers do have the right to opt out of changes at any time.