CAUTION!

There are two dangerous trends in credit card lending you must be aware of:
1. Shorter billing and payment cycles
2. Usurious Default Rates

SHORT BILLING CYCLES

Years ago, you had a full month in your credit card billing cycle to make the payment. If your statement cut off on the first of the month, you had until the 30th to pay. If you were late, there was no great harm unless you were more than 30 days late. In those days, you literally had 60 days to pay without penalty. Remember them?

It's not like that today. Credit card companies (this includes department store or chain store charge cards) give you far less time to pay. It's typically 20 to 25 days - from the statement date. But it takes several days to reach you in the mail - so you actually have even less time.

SOME CREDIT CARD RATES ARE UNCONSCIONABLE

Now, if you're late even one day from the due date shown on your statement they not only charge you a late fee (shouldn't that be enough?) they RAISE YOUR INTEREST RATE - dramatically!

The change to a higher rate is called the "default rate." So if you "default" on your obligation to pay on time, your rate goes up. The increase is HUGE: It may jump from 10% or 12% to 19%, 25% or 32%. We're hearing of some credit card companies charging up to 38% if you've been late once or twice.

We've always wondered why they think the person who had trouble paying at 10% can suddenly pay more timely at 32%.

HOW DO YOU KNOW THEY'VE RAISED YOUR CREDIT CARD RATE?

YOU MAY NOT KNOW!!!! You have to carefully look at your monthly statement to see it - they don't notify you that it happened. Sometimes, just because of a vacation trip or an honest mistake, your payment is a day or two late and WHAM: you're up to 32% or more!

So even if you search for the best deal - but use your high-interest credit card to pay for it - you wind up with no deal at all.

Because the fact is that $388 bargain LCD TV you buy at 32% interest really costs $608.40! That's a lot. And, that’s assuming you actually get your balance paid off. [Unlikely!]

A 12% credit card would make that TV only $464. [read more]

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