Credit Card Traps

What are credit card traps?  Traps are when companies use false, deceptive and misleading television advertisements, direct-mail solicitations, and customer service telephone scripts to market credit cards with allegedly “low” and “fixed” interest rates that, unlike competitors' rates, will never increase. Increases the interest rate on such cards up to 400% await consumers who trigger a “penalty” rate by defaulting in any number of ways.

Such companies aggressively market their brand image as the credit card company with the nation's lowest fixed rates. But that image is false. If you do something as simple as pay a day late, your rate can sky-rocket overnight.

These use “penalty rate” pricing to offer a supposedly “fixed” interest rate to consumers, but then increases that rate when an individual account holder defaults. Such companies also retain the right to unilaterally increase an account holder's interest rate--for any reason or no reason at all--based upon a “change in terms” provision in its credit card agreement.

There are a number of ways that credit card companies can cause you to pay more. A summary of the most common is presented here....