For credit card holders credit card interest rates can be the source of much concern. Out of control interest rates can quickly lead to a level of debt that is unmanageable under even the best of circumstances. Unfortunately, most people do not consider the dangers of credit card interest rates until it is too late and they are in over their head. Credit card companies are out to make money and the main way they do that is to charge people a fee, or interest, on the balance that they carry every month. The people that can use credit cards while going virtually unscathed are those that do not carry a balance from month to month and immediately repay what they spend on the card every month. People that use this tactic manage to get all of the benefits of using a credit card, such as convenience or reward points, while paying little to nothing in the process.
The main danger of credit card interest rates comes from the fine print of the credit card contract. The contracts are designed to make sure that the credit card company can milk their customer for every penny that they have in the event that they are late on a payment or default on the balance. Once a card holder makes a late payment or defaults on the balance the credit card company will usually jump at the opportunity to add as many fees and charges as they can to the balance while they try to collect. A car holder that misses a payment on a $100 dollar balance can very easily find that the balance doubles thanks to fees and charges. Credit card companies also use these situations to drastically raise the interest rate on the card. This little bit of information is usually contained within the jumble of fine print and stipulates that if a payment is missed or the account falls into default the interest rate on the card will revert to some astronomical default rate such as 20%.
Credit card interest rates have also been known to rise for almost no reason at all, meaning that a card that normally carried a 2% interest rate may be increased to 7-8% thanks to some cloudy statement listed in the fine print. Credit card companies are in the business of making money and unfortunately they feel that their best chance to do so sometimes requires them to use shady business practices.
Used appropriately and with good common sense credit cards can be a valuable asset and can even help build good credit history but credit card companies tend to target teenagers and young adults for a reason and that is because they do not know how to responsibly use a credit card. A young adult that is suckered into a credit card with a good initial interest rate may have failed to notice in the fine print where it said that after the first year the interest rate would revert to 15.7%. Such a situation may sound extreme but it is how credit card companies commonly get people on the hook for money that they will spend months or years paying off.