EIGHT Tricks Credit Card Companies USe To Make More Profit

There are many ways in which credit card companies make profits. Although, credit card companies make billions each year in legitimate interest charges and fees, they are constantly pressurised by their shareholders for better dividends. However, with so much competition, they need to adopt newer and 'creative' ideas and tricks to generate this income as less and less profit is being made from interest charges. It is important for every credit card holder to educate themselves on these sometimes unscrupulous but legal procedures adopted by these credit card companies so that any extra costs are eliminated or reduced.

#1. Not Posting payment received immediately - This is the worst of them: not posting your payment the day it was received. This is the oldest known trick: the company receives your payment in time but it is not processed immediately. Depending on the payment deadline, this delay can cause a late payment fee to be charged to your account. This is often due to legitimate reasons, but the policies of many credit card companies support a processing time that is not beneficial to their customers.

#2. They cause you pay late by changing the due date for your credit card payment. For being late the company will charge again a late payment fee and if the situation repeats for few months in a row they can legally increase your interest rate.

#3. Penalty fee for not using your credit card for a certain period of time. This is incredible but happens, this is a new tactic of the credit card companies to take your money.

#4. Charging fee for card protection - Credit card companies claim to safeguard the client’s peace of mind by offering credit card protection and only if you pay a yearly or monthly fee so that in case your credit card is stolen, lost or used fraudulently they will make reparations. Although, most credit card companies do not charge a fee for this service, there are others who do. The best thing you can do would be to avoid the latter the ones who charge.

#5. Charging insurance for unforseen circumstances such as loss your job or death - For this protection, usually, the fees are too high for the benefit received, but many customers purchase it out of fear.

#6. Increasing your credit limit - Increasing credit limit is a trick to make you spend even more. Especially, if you didn’t ask for a limit increase of your credit, this increase offers you the possibility to spend more money.

#7. Charging you more for use overseas. Another bad surprise is to come back from your vacation and find out that you have been charged more for the amounts spent during your foreign trip. With lousy exchange rate and an extortionate commission rate for the amount spent, it's better not to use your credit card abroad.

#8. Cancellation Fee - This is another unscrupulous way in which credit card companies have been making money from holders in recent times. This fee was adopted because a large number of the clients of a certain bank discovered the extra charges and they rushed all to cancel their accounts. The bank responded immediately by adopting a policy of charging a fee for closing an account. It is important to read the small print of your credit card agreement carefully as this practice has been adopted by other companies.

There are also other ways like penalization for having a big balance or charging credit insurance fees. It is important for all smart and savvy credit card holders to educate themsleves of these pitfall in order to prevent any insiduous charges by company issuing credit cards.