Ever since the Credit Card Accountability, Responsibility, and Disclosure Act [CARD Act] took effect in February 2010, credit card bills are easier to read and understand for the average American.
However, credit card companies sometimes still sneak in things in the fine print. They still find ways to take advantage of unassuming consumers who do not know any better.
Get smarter with your finances and more realistic about your plastic by becoming aware of these five secrets credit card companies hide from you.
1. Free rewards are not always free
Many of the cards with the best rewards have no annual fee for the first year. But if you read the fine print, there is often an annual fee the second year, sometimes as high as $100.
Before you apply for a rewards card, double-check to make sure there is not an annual fee that will later kick in and void some of your rewards. If there is one and you still want the card, make sure you will actually redeem the rewards within that year to make the card worth it.
According to reports, 78 percent of airline miles are never even redeemed.
2. It can be hard to earn rewards
This leads us to our next point — you may have found a reward card with no annual fee, but your next challenge is actually redeeming the reward.
Fortunately, some companies make it easy, like Capital One’s No Hassle Miles, which can be redeemed for a flight on any airline.
Some cards with air travel rewards are subject to blackout dates and availability restrictions that make it difficult to actually book a reward flight.
Other programs have great rewards such as gift cards and merchandise, but it can take thousands of dollars in purchases to earn enough points to actually get anything worthwhile.
3. Your APR will skyrocket for bad behavior
Did you sign up for a credit card with a very reasonable APR? Great, now make sure to use your card wisely.
When you spend over your limit or pay your bill late, especially with frequency, credit card companies have the right to give you a penalty APR that is much higher than your normal rate.
However, not all cards have this, so as you apply for cards, read the applications closely and look for cards without penalty APRs.
4. Your minimum payment is never enough
Sadly, it is usually only enough to cover interest and keep you in debt while meeting your bill’s due dates.
The CARD Act thankfully requires statements to now show how long it will take you to get out of debt if you only pay the minimum, and it is staggering.
It can take decades for large balances. If you want to make progress on your credit card debt, you have to pay more than your minimum payment each month.
5. You have debt collection rights
Have you wound up in a mess of credit card debt? Yes, debt collectors are allowed to come after you to collect payment, but they do not get a free-for-all.
They are required to abide by the Fair Debt Collection Practices Act, which prevents them from harassing you, threatening you or using abusive language.
Know your rights, and if they are being violated, file a complaint with the Federal Trade Commission on their hotline at 877-FTC-HELP or on their website.
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.