Credit Card FAQ
What is a Credit Card Default Interest Rate?
Even though credit cards are seen to be a great wonder of life, especially to help those in times of difficult need, there are a number of things that are generally over looked. What most people tend to forget and over look is the fact that they are required to pay back the money that they have spent on credit. Even though credit card companies are known to give generous credit limits, there are a number of hidden clauses that one has to be on the look out for. The mistake that most people tend to fall under is simply looking at the credit limit amount that they are being granted and have a glance over the interest rate that they are expected to pay. Anything and everything that your purchase using a credit card will require you to pay it back inclusive of interest.
How much interest rate you end up having to pay will be based on a number of different factors. The main factor that is known to act as a huge contributor in regards to the interest rate that you will be expected to pay is mainly based on your over all credit rating. What that basically means in layman terminology, is that those whom have a good credit rating will be eligible to a low interest rate payment and vice versa. Even though this is the way it has been made out to appear to the general public, the importance of reading the fine print could not be stressed enough. This is where credit card default interest comes into play.
In nearly every credit card agreement that you decide to go for, there is a small clause in the fine print which talks about the credit card default interest rate. Seeing as the interest rate is solely based on your over all credit rating score, this is where things start to get slightly complicated. Say for example that you have a good credit rating score for which reason you have been granted a low interest rate. Due to a late payment or due to some other reason over the last four months after you initially applied for your credit card, your over all credit rating has dropped by a slight margin. Seeing as credit card companies are always assessing your credit rating reports on a regular basis, what this does is that they are entitled to issue a default interest rate instead of the standard one that you were paying which is always much higher.
This increase in interest rate is bought into my default and without your approval or consideration. Even though this seems to be unfair and unjust, all of these details are known to be stated in the fine print which you are expected to read and then sign. What majority of us do is simply sign the agreement without even having a proper glance through the entire document. Ideally it would be a good idea to get some legal advice before committing yourself to any credit card company.
Discuss it at Credit Card Default Interest Rate forum.
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