Credit card applications arrive in many of our mailboxes on a daily or weekly basis. Often the application provides the consumer with very minimal information, sometimes offering little more than a pre-approval notice. Much of the time, even something as basic as the interest rate, or APR, is not disclosed until the card has been approved. This can cause consumers to accept credit cards that may have unreasonable interest rates. Avoid accepting a card without a clear understanding of the annual percentage rate, how interest is factored, when interest is factored, and for what period of time the interest rate is guaranteed. Many customers are confused by the annual percentage rate, and have a poor understanding of how their credit card actually works.

The interest on your credit card will be calculated monthly, and some companies may charge interest on portions of a balance that has already been paid. Look at the interrelationship between interest compounding dates and payment dates to avoid paying interest on balances you have already paid. Research how your credit card company calculates interest to be certain that they are compounding interest in a fair and equitable way.

Another questionable practice at many credit card companies is the fee structure. Consumers may find themselves charged fees not only for late payments, but also for over the limit charges, and even bill paying with their credit cards. While some of these additional charges may be avoided with responsible card usage, many credit card companies are making these fees a regular profit source. Watch payment due dates closely, and if need be contact your credit card providers to request a specific due date if it would be more convenient for you. Know your credit card limits, and keep your credit card balances well below the limit. Do not expect your credit card provider to decline the transaction if it exceeds your credit limit. It is your responsibility to be aware of this.

Universal default is a little known credit card company strategy, and one that strikes many consumers. This practice is both so widespread and so concerning that the US Congress has taken an interest in eliminating it. Universal default allows your credit card company to drastically raise your credit card interest rate because of other activity on your credit report, whether a missed payment of some sort or additional spending on another credit card. Universal default clauses are common in credit card agreements, and can lead to interest rates doubling or tripling. While conscientious payment of all debts will generally keep you from being a victim of universal default, the best option is to avoid keeping lines of credit with universal default clauses. Consider taking time to contact your credit card companies and ask about their universal default policies.

Understanding the business practices of credit card companies can be really helpful for consumers. Universal default practices make potential credit card difficulties even more challenging for debt ridden consumers. When selecting a new credit card, first look at your own credit card usage, and ascertain that you can use credit rationally and responsibly. If you are unable to do that, avoid accepting and using credit cards. If you do feel that a credit card is a reasonable choice for your financial well being, read all paperwork and agreements carefully, pay all your bills on time, and shop around for a card with a low interest rate and a reputable credit card company.