Buried deep in the fine print of your credit card's terms and conditions, chances are you will find something known as the "penalty rate clause". In fact, more than 75% of credit card issuers include a penalty rate clause with their card offers, and this number is increasing as credit defaults are on the rise and issuers are looking for ways to increase revenues through higher interest rates and fees.
The penalty rate clause basically states that your interest rates can increase dramatically if you make just one late payment on your account. How much is dramatically? Well, that depends, but it will likely be north of 20%. Ouch. So, if you are searching for a new credit card or carrying balances on your current cards, make sure you skim the fine print for the penalty rate clause. Read it carefully, and understand what you are signing up for before filling out the application.
