Most of us have at least one credit card, debit card, or some sort of charge card in our wallet or purse (or, a lot more than one!). These days, we reach for them without a second thought for many of our purchases, as charging-it-on-plastic has become a way of life. But little do we know, the credit card industry is a shadowy giant, with countless tricks, tactics, and, yes, even secrets, that allow them to generate jaw-dropping profits every year.
In this on-going series, I’ll share some of these credit card secrets, starting with these seven:
- The expiration date on your credit card doesn’t really mean much.
Every card has an expiration date, and consumers usually assume that their card won’t work after that date. However, they won’t automatically cease use of your card after that date. In fact, credit card companies issue them somewhat arbitrarily based on the average use of each account and as a mark to send you a new card (and for security purposes). But most cards will still work after the expiration date!
- You could circle the world more than THREE TIMES with all of the credit cards in circulation.
There are about 1,635 million cards in circulation around the world. If you laid them all out side-by-side, you would span 86,981 miles – far enough to circle the earth 3.5 times! That’s crazy!
- There’s about one VISA card for every person in the U.S.!
VISA is the most popular credit card in the U.S. and the world. In fact, there are 337 million VISA credit cards in circulation in the U.S., which averages out to almost one VISA credit card for every single person in the U.S.! There are also about 781 million VISA cards in use around the world.
- Two-thirds of all transactions now involve plastic.
67% of all in-person transactions are made with credit cards or debit cards, and only 27% in cash. Of course, 100% of online sales are non-cash transactions!
- You can validate your card by adding up its numbers.
There’s another built-in protection to make sure a credit card number is valid by using something called the Luhn algorithm, but it’s one that 99.9% of people don’t know about.
It works like this: Starting from the first number of your credit card, double every other digit. Add the doubled digits to the ones that you didn’t double. If the sum is divisible by 10, your credit card number is valid. If not, then you’ve either made an error or it’s a fraudulent card or scam transaction!
- Your credit card interest rate may be illegal according to most states!
Each state has their own usury laws that limit the interest rate a credit card company or lender can charge consumers in that state. These are lower as you may think, like only 6% in Alabama, 7% in California, and 16% in New York.
- But, there’s a big workaround.
If you live in California, you may be looking at your credit card with a 13% interest rate and wondering if it’s either A) illegal, or B) #6 above was dead wrong. But there’s an important workaround: A 1978 Supreme Court case in Marquette National Bank of Minneapolis vs. First of Omaha Services Corp ruled that state usury laws DO NOT apply to national banks – which almost all credit card companies are!
Look for more credit card secrets coming soon, and feel free to contact us if you ever have questions about credit reporting, your FICO score, or debt!