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Reading the credit card fine print

Credit cardholders often are surprised when they get socked with some unexpected fees or discover when that first statement comes that their interest rate isn't what they anticipated.

Late fees. Overdraft charges. Rate increases that come unannounced and seemingly without cause. Old debts mysteriously appearing on new credit cards.

Like it or not, these credit card surprises are usually completely legal, because the card issuer warned in advance that it had the right to do so.

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So the question for cardholders is, how do you avoid all of this and protect yourself from unexpected charges, rate increases and the like.

The answer is one you're undoubtedly heard before -- read the fine print!

Gay Watson of Consumer Credit Counseling Service, or CCCS, of Greater Atlanta reminds us that it's seldom as good as it seems. "Even if the offer says zero-percent or a low-percent interest rate in big letters, it may not apply to you. The credit card company will decide exactly what you are 'preapproved' for when they check your credit reports or scores. The really low rates are for the best scores."

The answer, say the credit card experts Bankrate spoke with, is to always read the fine print. Before you sign that application and drop it in the mail, make very sure that you know exactly what you're getting.

Perhaps the most important thing for you to remember when you sign up for a credit card is that the companies retain the right to change the terms at any time. They can raise rates, shorten grace periods and basically change the relationship in ways that work to their advantage.

That's why you need to study the filler material that comes with your statement each month.

But frequently the things you wish you had known were right there from the start, and you would have known if you'd done your homework before you accepted the agreement.

Here are some things you may see on your credit card offers, including some common and some less-common charges, and what they could mean to you.

APR, variable-rate information: The initial interest rate is often one of the large-print items stated on the front of the offer, but how the rate will eventually change is listed on the back and is just as -- if not more -- important.

Eric Gelb, CEO of Gateway Financial Advisors, estimates that at least 30 percent of Americans carry the majority of their balances at the end of the credit card's promotional rate period. "My experience and research show that most of the promotional offers require a minimum payment or an interest-only payment. The trouble is most people are not organized enough to retire the entire balance before the due date."

Next: The fine print will warn you ...
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