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Understanding credit
card contracts
By Libby
Wells • Bankrate.com
You wouldn't
attempt ski diving without instruction, would you? Same goes for
your credit card, experts say.
Gary Klein, consumer credit specialist with the National
Consumer Law Center, and Gerri Detweiler, author of The
Ultimate Credit Handbook, offer some advice about credit
card contracts:
- Do not use a credit card until you have a good
grasp of your contract. "You are best off not using the card until
you understand the terms, so try to slog through that thing,"
says Detweiler.
- It's a guarantee you will have difficulty interpreting
the fine print. As you read the contract, underline parts that
are incomprehensible, take notes and then ask the card company
for clarification. "If you don't understand the contract, the
issuer needs to explain it to you," says Detweiler. "You may have
to be really persistent to get your questions answered."
- NEVER throw away card agreements and amendments.
You will need to refer to them.
- When going through credit card mail, watch for
red flags such as "change in terms," "notice to cardholders,"
or "revised cardholder agreement."
- Klein advises consumers to cancel cards that charge
fees for paying off balances or not using the card. "Inactivity
fees and fees for paying off the card balance on time are pernicious
practices," he says. "They are intended to encourage people to
run up a balance on the card and thereby to pay interest."
- Don't be afraid to call it quits with your card
issuer if they raise your interest or charge you for being one
day late with a payment. "Sometimes a threat to cancel will lead
the lender to reverse the charge," says Klein.
-- Updated: May 5, 2004
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