Dissecting the fine print in your credit card agreement

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When applying for a credit card, you likely would’ve already become familiar with the standard information: the annual fee, rewards rate, annual percentage rate (APR) and maybe a welcome offer.

While these details are major factors when choosing a credit card, there are more questions to consider before finalizing your decision. Such as: What constitutes a penalty? Are there foreign transaction fees? How high will the variable APR get?

The good news is you can find answers to these questions in your credit card agreement. However, really getting a good handle on all the details calls for you to look closely at the fine print. Overlooking crucial information could leave you in the dark as to why you might suddenly find yourself paying more interest each month or being charged additional fees.

Here’s a breakdown of what to look for in an issuer agreement, and how to interpret the lines of text in order to avoid any curve balls.

Annual percentage rates

Your credit card agreement should begin with an easily identifiable table (called a Schumer box) containing important information on your card. This is the only section standardized across issuer agreements, so it’ll take more than just a quick glance to fully understand the terms of your card.

The Schumer box will provide information on your card’s APR, which is the annual interest rate you’re charged for borrowing money with the card. This may seem straightforward, but under certain circumstances the rates can get convoluted. There will be several different APRs listed, so we’ll help you figure out what to look for.

APR for purchases

This is more or less your standard APR. The rate will be applied to your outstanding balance at the end of each pay period if you’re not able to pay in full.

Here’s where you can also see if there’s a welcome offer. If you know you’d like to make a large purchase that might leave you with an outstanding balance, you’ll want to take advantage of your initial low rate to avoid paying extra interest when the time comes.

The issuer agreement will detail whether your card has a fixed or variable rate, as well as the range it can vary if applicable. You’ll want to know this information in advance, since some cards may have a higher maximum rate than you realize.

APR for transfers

Your APR for transfers (commonly referred to as balance transfer APR) is the interest you’ll pay when you decide to move a credit card balance. Similar to purchases, you’ll see whether your card has an introductory offer on your balance transfer APR and the rate thereafter.

Additionally, if your card has a variable transfer APR, the range will be identified in the Schumer box.

APR for cash advances

If you take out a short-term cash loan with your credit card, this is the interest rate you’ll face. These rates are typically higher than those for transfers and purchases, so you’ll want to know just how drastic a difference it is with your card.

Penalty APR

This is one of the most noteworthy figures on any credit card agreement. Managing your money properly to avoid this rate is a must. Issuers will jack up your purchase APR as penalty for missing payments.

The penalty APR can even exceed the high end of the variable rate, which comes as a surprise to many cardholders.

APR: the fine print

Finding the interest rates for the different segments of your card is important, but the fine print is just as crucial. Most importantly, you’ll want to find out your issuers standard for doling out a penalty APR.

You might also find details on any of the following:

  • The calculation of your variable rate
  • What to do to avoid paying interest
  • How interest charges are calculated and applied
  • What circumstances will cause your rate to change

Depending on your card, there may be additional detail concerning APRs that you’ll want to know.


As you further dissect your agreement, you’ll find that the Schumer box contains details on timing and payments associated with your card.

Paying interest

Card issuers will identify the due date for your payments in relation to the billing cycle and when interest will be charged. This cadence can differentiate between purchases, transfers and cash advances. So, it’s best to know the details and pay balances on time to avoid penalties.

Minimum interest charge

Although it should be a very low amount (often around $0.50), your issuer will determine your minimum interest payment in the Schumer box of your agreement.

Payments: the fine print

The payment allocation clause found in the fine print of your agreement sheds light on how your minimum payments are dealt out across different types of debt. With your debts having different interest rates associated with them, it’s good to know how these payments are distributed.

By law, payments that exceed the minimum have to be applied to the highest APR debt before any others. As you pay off each debt category, this payment hierarchy holds true.

Your agreement will also contain information on accepted forms of payment, how your payment is processed, the application of your payments and more.


Some fees will be front and center, but it may take a deeper dive to keep all of them on your radar.

Annual fees

You’ll probably know this figure before looking into the agreement, but check to see if the fee increases after the first year.

Transaction fees

These will be dependent on the capabilities of your card, but in most Schumer boxes you’ll find the fees associated with cash advances and out-of-country purchases.

Card providers often use clauses like “the greater of either $10 or 3% of the amount of each cash advance” when explaining a fee.

Penalty fees

Late payment, over-the-credit-limit and returned payment fees are typically found in the Schumer box. Hopefully you can avoid any situation forcing you to pay these, but it’s helpful to be aware of them going in.

Fees: the fine print

More often than not, your credit card agreement will point out several other fees. There can surely be charges beyond this list, but be on the lookout for the following:

  • Membership fees
  • Stop payment fees
  • Transfer fees

Bottom line

Your credit card agreement will cover other necessary material; rewards structures, credit limits, authorized user info, disputed transactions and more.

While these are all critical, the real added value of reading through your agreement will be found in knowing what to avoid. With the right preparation and attention to detail, you’ll be ready for any curve balls that come your way.

Written by
Joey Robinson
Credit cards contributor
Upon graduating with a Bachelor’s degree concentrated in Finance, Joey worked at “Big Four” (Ernst and Young) accounting firm before exploring the world of credit cards. Over the past two years, he’s shared his expertise and has brought understanding to complex topics as a writer and editor for sites like Bankrate, CreditCards.com and NextAdvisor. His advice on avoiding common credit card fees, top balance transfer tactics and more financial tips have been featured on MSN Money and other various news publications.