|Reading the credit card fine print|
|By Larry Getlen
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.
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
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."