| Bad Credit Card Rap |
| By Credit Federal |
Published
10/13/2008
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Credit Card
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Good and Bad Credit Card Features
Although much of the credit crisis can be blamed on how poorly banks managed their own finances, somehow credit card companies are evermore targeted to receive a bad rap. Of course to appear heroic to constituents, federal regulators will propose new laws to punish the 'bad credit card companies'. But the hard truth to swallow, is that many card holders are responsible for digging the credit card debt pits they are in, by charging more than they can payoff in full each month, and for using credit cards to pay bills for which they ran short of cash. Then, when the credit card bills roll in and they pay only a minimum instead of the full balance, letting interest charges rack up. So it's not the credit card company's fault that the convenience of revolving credit was abused, or that the cardholder suffered a loss of income or a rising cost of living.
Less regulation is key to helping people get even more benefits and lower rates. There are some good credit card company laws, but it's competition that is key for consumers to get the most benefits. If credit card companies are allowed to make a profit in an open market, more credit card issuers will arrive on the scene to compete with other issuers. This competition leads to lower rates and greater benefits in the struggle to win customers. But; when legislation binds the hands of free enterprise, there will be fewer credit card companies and virtually no competition. This leads to unattractive 'take it or leave it' options for consumers.
At this point in the economic crisis, it's important to remember what we love about credit cards, and what they offer:
- Purchase Protection: It's easier to get your money back when you purchase with a credit card instead of using cash or a check. With a credit card, the dispute process is much simpler, and quicker. One of the good laws; the Fair Credit Billing Act, covers purchases made by credit card (not debit card), anywhere in the world, as long as the credit card was issued in the United States. In a nutshell, if a purchase dispute is found to be in your favor, you don't have to pay the charge. Additionally, many credit cards offer automatic, free extended warranties on certain purchases.
- No Fee Freebies: Some credit cards offer around the clock freebies, such as free car rental insurance and some offer travel insurance.
- Free Rewards: In addition to no fee freebies, many cards offer rewards like airline miles, cashback and discounts for certain purchases.
- Theft Protection: If your wallet gets stolen, unless the thief is caught it's not likely you'll get your cash money or checkbook returned to you. But you can easily get a new credit card issued and; at most, only be liable for up to $50 if the thief runs up fraudulent charges on your card.
- Instant Loan Approval: A credit card is in fact a loan. At anytime you can get a loan for a purchase. If you are short of cash or simply didn't carry enough cash with you and your car broke down, you can get back on your way by using a credit card's instant loan convenience.
- No Interest Loan: As mentioned in the previous feature, a credit card offers instant loan approval. And; if you payoff the loan within the grace period, there's no interest charged.
Of course; as with most anything, there's a down side. Here are some of the bad features of credit cards:
- Interest Rate Changes: Most likely, you'll see a statement in the credit card fine print that the issuer may raise your interest rate (and/or annual fee) without advance notice based upon changes in your credit report and score. One of the new, good laws is to allow you to payoff the balance at your previous, lower interest rate if you don't agree to the increased rate.
- Fees: Some credit card fees are overboard, particularly fees for paying your bill by phone.
- Reward Limits, Terms & Conditions: To get the most of your credit card's rewards, you need to fully understand limits, restrictions, caps and so forth. Understanding all the fine print can be a challenge.
- Customer Service: This is one area where credit card companies are learning a lesson, and some are trying hard to improve. If you ever have a problem with your credit card company's customer service, ask for the manager on duty and remain calm. A manager will likely give you the service you need as long as you remain calm and equally respectful. And the reason is clear... if you've been a good customer (at least paid the minimum monthly due each month) they'll want to keep you and they know you could likely switch to a competitor card.
Summary: If you use a credit card wisely, whether a standard unsecured credit card or a rewards card like a gold or platinum credit card, you can enjoy all the benefits without suffering any of the bad aspects.
Browse and submit your online credit card application today.
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