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Credit Card Bad Credit Traps

Credit card bad credit searches will yield you quite a few hits and offers from credit card companies to sign up for their credit card. But if you are in debt and tempted to sign up for one of the many credit cards designed for those with bad credit, you might want to wait just a bit.

Many times these credit card offers will come to you in the mail with come-ons such as “no annual fee”, “zero percent interest rate for the first twelve months”, and “transfer your credit card balance free – with no fee”. The goal, of course is to get you to become indebted to them instead of your current company.

And every year, as a result of these solicitations, many consumers end up switching their balances from their high interest credit cards to credit cards owned by the bigger banking institutions. For many consumers, those who can budget effectively, these can be really good deals. Unfortunately, however, most of us are really bad at managing credit card debt. A fact that the major credit card companies are more than willing to take advantage of.

The main cause of most of the problems is a failure to read and understand the small print. The small print on the credit card agreement is where the real terms of the credit card usage are explained. And often, you find that the benefits given in the headlines and marketing statements are taken away in the fine print.

For example, the “0% interest rate” trumpeted in brochure may quickly turn into 21% interest rate or more if you don’t pay the remainder of your balance by the next billing period. Or, you may discover after you are late for a payment that you suddenly owe a substantial late penalty as well as having the 0% interest rate canceled.

In addition, credit card companies and banks give themselves an even greater edge by stacking the deck. As quite a few ‘whistle blowers’ have testified, many banks intentionally delay the processing of payments received by mail until after the due date. So even if your payment arrives at the credit card office on time, since the payment is not processed until after the due date, the consumer is charged a late fee. And these days, late fees can be pretty hefty – as high as $39 or more. In fact, late fees have become so large and pervasive that they account for a third of credit card companies annual revenue.

If you have bad credit, these card companies are astutely aware of your predicament. They know that you’re among those who are the most vulnerable to their credit card offers.

To make matters worse, once you’ve transferred your balances to their credit card and run afoul of one or more of their rules, they know that they have you trapped. You become vulnerable to more and more of their charges, possibly straining your credit resources to the breaking point.

And it’s at this point that you will begin to receive credit cards for bad credit in the mail. Most of which will contain the requirement that you pay an annual fee and higher interest rate.

The key point is that to avoid this situation, simply read the fine print before you accept any credit card offers. Especially if you have bad credit.

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