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Credit Card Debt – Watch Your Credit Report And Your Bill
By Charles Essmeier

Most consumers are aware of the importance of their credit
report. This document, offered to consumers and lenders by the
three major credit bureaus, offers a fairly complete list of
financial transactions and debts incurred by a consumer.
Lenders examine the report, along with the associated FICO
score, to determine whether a consumer is worthy of receiving
additional credit or loans. What many consumers may not know is
that credit card companies regularly check their credit reports,
and unfavorable entries may result in a higher interest rate on
their credit cards.

We have previously noted that many credit card companies employ
something known as a “universal default clause” in their terms
of service. This clause allows the company to raise interest
rates on the customer’s card if the customer pays bills late. A
late payment to the phone company could result in a higher
interest rate on the Visa card. Most companies also allow
themselves the latitude to raise their customers’ interest
rates for any reason at all. With this in mind, the credit card
companies tend to run occasional credit checks on their
customers, often raising rates if they notice any activity
that, in their opinion, makes the customer a higher risk. This
might happen even if the customer has a history of paying his
or her credit card bills on time.

The sorts of things that may create a “risky” client include
taking out additional loans, additional credit cards, or
building balances on existing cards to at or near their limits.
The companies justify this activity by saying that consumers who
do these things create greater risk for the lender, and these
costs must be passed on to all of their customers. The problem
for the customer is that these higher interest rates are often
assigned without warning. The new rate applies to existing
balances, too. An interest rate hike today could mean that the
television you bought last fall has suddenly become more
expensive.

What can consumers do? Keep an eye on your credit card bill and
your credit report. You can receive a copy of your credit
report, for free, at http://www.annualcreditreport.com. As for
your credit card bill, watch the interest rate. If it abruptly
changes to a higher rate, call your credit card issuer and ask
them about it. They will often reduce the rate if you call and
complain. If not, your only option may be to shop around for
another card.

About the Author: ©Copyright 2005 by Retro Marketing. Charles
Essmeier is the owner of Retro Marketing, a firm devoted to
informational Websites, including http://www.End-Your-Debt.com,
a site devoted to debt consolidation and credit counseling.

Source: http://www.isnare.com