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The "Uncreditworthy"
Lenders know that you can only declare bankruptcy once every 6 years. So in their quest for so-called secured business, they prey on the "uncreditworthy". College students are the largest target market, but so are the recently bankrupted.
"Uncreditworthy" souls don’t pay attention to reduced minimum payment requirements, a creeping interest rate and higher lines of credit each month. Lenders do NOT have to inform you that they are changing the APR; the good ones do however.
Location, Location, Location
It’s no wonder that most lenders are located in South Dakota and Delaware. These states have very relaxed consumer protection laws. They also don’t regulate interest rates or fees, which are often at what would be considered illegal elsewhere.
The best credit card companies reside in Arkansas, where state law prohibits high rates.
Rate Hikes and Mysterious Fees
As I said before, the APR can change without your knowledge.
Then there’s the magically appearing annual fee. Penalty fees for inactivity and transaction fees for calling the toll-free number are commonplace.
Other neat tricks are lowering the limit when you get too close, having you skip a payment for being a "good" customer, and sending you those thousands of cash advance checks throughout the life of the card.
And let’s not forget the disappearing grace period for us savvy credit card users who pay our bill in full each month. So, interest starts appearing even though you don’t carry a balance.
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