2009 Credit Card Study
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2009 Credit Card Study: The fine print

Intro rate for purchases: All of the issuers except USAA offer a zero percent interest rate. How long that rate lasts varies, though, from six months to 12 months.

Default APR: The default interest rate -- the high rate that a cardholder may be charged for violating the terms of the credit agreement -- ranges from 11 percent at USAA to 29.99 percent at four issuers: Chase, Citi, Discover and FNB Omaha.

Default rates are usually calculated by adding a margin -- a set percentage -- to the prime rate, so the rate may vary. For example, Capital One resets its default rates each quarter, adding 19.99 percent to the prime rate in effect at the time.

Applying payments to balances: All of the issuers apply payments to the lowest interest rate balance before the highest rate balance.

Chase has interesting wording about how the payment is applied:

You may authorize us to allocate your payments and credits in a way that is most favorable to or convenient for us. For example, you authorize us to apply your payments and credits to balances with lower APRs (such as promotional APRs) before balances with higher APRs.

It sounds like you have a choice, when of course you do not.

How rate is set: All of the issuers base the APR on the prime rate as published in The Wall Street Journal. What varies is when they choose to peg the rate. For example, American Express uses the rate on "the first day of the billing period or two days prior to the closing date for that billing period, whichever is higher." Bank of America uses the "highest rate appearing in The Wall Street Journal" at any time in the preceding three months. Discover uses the highest prime rate listed in the Journal on the last business day of the month.

You can check the prime rate at Bankrate.com.

Minimum payment due: There are many variables for a cardholder's minimum payment, so it's important to read the fine print to see how yours is calculated.

For example, American Express charges 2 percent of the balance due or current finance charges, or a $15 minimum payment. At Capital One, it might be 1 percent plus finance charges plus fees with a $15 minimum, or 3 percent plus finance charges plus fees with a $10 minimum; it depends on the terms of the account. Citi calculates its minimum payment depending on APR: If there is a zero percent APR, the minimum is 1.5 percent of the balance. If the APR is above zero, the minimum is 1 percent plus fees and finance charges.

Find out the true cost of paying the minimum by using this Bankrate calculator.

See Bankrate's study results.


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Product Rate Change Last week
Balance Transfer Cards 15.86% --0.00 15.86%
Cash Back Cards 16.37% --0.00 16.37%
Low Interest Cards 11.10% --0.00 11.10%
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