In recent history, credit cards have become available to consumers in huge numbers, the result being that many consumers are becoming persistent debtors. Credit card companies are making a significant profit or credit would not be increasingly available.

Many credit cards require the consumer to pay an annual fee which is automatically put on the credit card on the anniversary date. The consumer can cancel the card within thirty days and not be liable for the fee.

Credit cards have different interest rates. It is common for the interest rate on credit cards to be higher than the interest rates available from banks on loans. It is not unusual for the interest rate on a credit card to be as high as is legally allowable. Therefore, before you decide to accept a particular credit card, check the interest rate you will be charged. It is disclosed as the APR (Annual Percentage Rate).

Minimum payments on credit cards are often designed to allow the credit card company to make the most money. If you only make the minimum payment each month, it may take a very long time to pay off the credit card. Always check the finance charge on the statement. If your payment is less than the finance charge, your balance will increase the next month even if you make no purchases.

Some credit card statements will say no minimum payment is due for a month, however the finance charges continue to accrue.

You should always check the statement and immediately contact the company if you dispute any of the charges.

Many books on individual finance say a consumer should never buy an item on credit that loses value. That would include almost everything except real property. It is best to use a credit card only when you can pay the balance when it first comes due.

If you have specific questions about credit cards contact your local legal services program. 

MidPenn Legal Services (MPLS) is providing information concerning credit cards. MPLS in providing this information, is in no way agreeing or implying that it will represent individuals who use the enclosed information. Although this information is believed accurate at the time of preparation, MPLS assumes no responsibility for the accuracy of this information. Individual situations require individual analysis and you may need to consult a lawyer in your situation.

Date Last Reviewed:  July 2003