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Reading the credit card fine print
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Notice of reaffirmed debts: If you have ever defaulted on a debt, be very careful that your solicitations for "new" cards don't mention your old debts.

Some credit card issuers buy old debts from other companies and then offer "new" cards to the people in debt, only to shock the cardholder on his first statement with the old debt. If a company mentions their right to do this in writing at any time, then it's legal, and you're responsible.

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You're approved up to $25,000!: This one's not actually in the fine print, it's right there on the front, but people misunderstand it. The words "up to" are there for a reason.

Someone will apply for a card because they think he'll have $25,000 in credit, only to find a substantially lower limit once he's approved. Credit card companies will set your limit based on your credit history, and the large number on the offer is an enticement that probably will not be your ultimate credit amount.

Double-billing cycle: Robert D. Manning, a professor of finance at the Rochester Institute of Technology, reports that some companies employ a double-billing cycle, which means that while the due date on your statement refers to your minimum payment, the due date to pay off your entire balance is different.

If that due date is two weeks earlier, and you pay off your entire card by the due date stated on your bill, then the company could still charge you interest for the two-week interim period.

The fine print will warn you if the company plans to apply a double-billing cycle.

Fee for overdraft protection: Many credit card companies offer overdraft protection on your checking accounts. That doesn't come for free. As with anything else, there may be extra fees on this, possibly nullifying their benefit.

Arbitration: Some card companies note in the fine print that if there's a dispute, you agree to go to arbitration.

"If you accept a card with arbitration, that's a big red sign that says, 'Kick me,'" says Manning. "That means that if you have a complaint with a card company, you have to pay for arbitration."

Balance transfer terms: Lots of people dispute charges, but if you transfer balances, you may lose that right.

Gift card terms: If you buy something with a gift card, you may not have the same rights, like purchase protection, that you would otherwise have on the card.

Leslie Hunt contributed to this story.

Bankrate.com's corrections policy -- Posted: Nov. 1, 2005
 
 
 
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