Match Your Card and Lifestyle: You must Read the Fine Print

by R. MAK. on August 2, 2009 · 0 comments

in Business Credit Cards,Card Technology,Choosing a Credit Card,Credit Card Debt,Credit Card Processing,Credit Cards

This often happens that credit card holders get surprised when they get socked with some fees that they have never expected, or it mostly happens when first statement comes than the card holders find that their interest rate isn’t what they have expected.

Late fees. Overdraft charges. Unannounced increases in rates and it seems that there is no cause behind that increase. Old debts mysteriously emerging on new credit cards.

fineprint

Whether you like it or not, these surprises that you get from credit card companies are usually completely legal as the card issuer in advance have warned that they had the right to do so.

So here the question that arises for card holders is, how can I avoid all this and protect myself from unexpected charges, rate increases and the like?

The answer to this question is the same that you’ve undoubtedly heard before — read the fine print!

People are often trapped by credit card companies and they do this by sending offers with big promises in big letters. It has been reminded by Chris Bender from the National Foundation for Credit Counseling that all these things are never as simple as it looks like.

Troubles that arises in Reading the Fine Print

  • disclosure, or “fine print” is not read or understood by 33% of consumers
  • 20% are unable to find the critical terms
  • 44% are not aware of the APR on their cards
  • 20% have no idea what their card limit is
  • 70% didn’t know the “universal default” policies

It is always advised by the experts that you should always read the fine print. Before that you sign that application and send it to card company make it very sure that you know exactly what you’re getting into.

credit_card

Guess who’s in charge?

 

Perhaps the most important thing that should must be remembered by you is that when you sign up for a credit card then  the companies retain the right that they can change the terms at any time. They can increase rates, shorten grace periods and basically change the relationship in such ways that it work to their advantage.

That’s why it is really very important for you to the filler material that comes with your statement each month as explained by me in this story.

But frequently all those things about which you have thought are necessary for you to know were right there from the start, and you would have gained complete knowledge about them if you’d done your homework before accepting the agreement.

Below I have written some things that you may see on your credit card offers, this includes some common and some less-common charges, and also the description that what they could mean to you.

 

APR, Variable-rate Information:

 

Usually the initial interest rate is mention among the large print items stated on the front of the offer, but how these rates will eventually change is written on the back, and it just seems that card company want you to think that it is just not so much important.

 

apr

 

According to John Waskin, executive director of the national nonprofit debt counseling service Bill Free – American Credit Counselors, the majority of their balances is carried at the end of the promotional rate period by 53 percent of Americans. But even though if you’re regularly paying off your bill, just one or two slips can change your rate.

You will be warned by the fine print that which are those slip-ups that could cause a rate increase.

Payment Allocation:

If your card is being used by you for both purchases and cash advances, or you are using your card both during and after a promotional period, then there are such chances that you’ll carry charges with two different rates. But if it is assumed by you that your payments will pay off your highest rate first, then you’re probably in for a disappointment.

By payment allocation you are informed that how they allocate your payment in the event of differing rates, including how they may be allocating all payments to the lower rate before that you pay off the high one. You should always make sure that you know how payments are allocated, and whether you are having any rights to request how they should be allocated.

So before signing out any agreement you should first read out the fine print to make sure you know this before you accept the card.

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