Reading the Fine Print on Your Credit Card Application. How Important is it?

Just about everyone save lawyers does the same exact thing when it comes to fine print. Gloss over it and pray that everything is right. This is especially true when you are filling out your application for a credit card.

Even if you think that you are applying for the best credit card available, there is going to be fine print that contains all of the important information. Credit card issuers know that people tend to pass up all of the legal information that is printed on a form. This is a big mistake because not reading the fine print can directly affect your pocket book.

What people fail to understand is that a credit card is much like the kind of loan you would use to purchase a car or a house. It is contracted just like a normal loan and has certain requirements on the part of both the borrower and the creditor. Failure to make monthly payments will subject you to late fees and penalties.

There are of course ways to avoid all of the extra fees and charges on credit cards. If you know what to look out for when shopping for a card you will save yourself some financial difficulty. It is important to remember that credit cards unlike conventional loans are subject to constant change.

You may have applied for a credit card with low APR or one of the lowest interest credit cards available, but in most cases those are only opening offers. After a predetermined amount of time, the credit card company has the right (it says so right in the fine print that you didn't read) to make changes as they see fit. Many may think they are applying for a 0% APR credit card when in fact that is only an introductory offer.

To make sure that you aren't hit with any surprises make sure that you read everything in the introductory offer. Once you have accepted that offer, keep any eye on your monthly statements. Your interest rate can be raised or another company, which will nullify your introductory offer, can buy out the issuing bank.

Interest Rates For many, determining their actual interest rate can range from difficult to impossible. To make it even more confusing a credit card with no annual fee may use an "average daily balance" method to determine your finance charges. Another fee may be incurred during what is called a "double billing cycle". This means that by the time you receive your statement, the minimum amount due has already passed and you have been incurring interest charges.

Another point to keep in mind is the fact that credit card companies will apply any payments to purchases made under the lower interest rate. Many people do not realize this and may think that their payments are being applied in a way that benefits them. Reading your statement carefully will quickly show that this is not the case.

Fees If it weren't for fees credit card companies would be few and far between. There seems to be no end to the kinds of charges you might find on your bill. Even if you are dealing with the best credit card company you will find late fees, inactivity fees, annual fees, over the limit fees, cash advance fees and more.

Moreover anytime you use your credit card you run the risk of incurring some kind of fee. Keep all of that in mind whenever you use your card to help you determine whether or not you really need to make a purchase with the card.

Variable rates and APRs Most likely just today your mailbox was full of low interest credit card offers. On the cover in gigantic script is the promise of super low interest rates or even 0% percent on balance transfers. That is all fine and dandy but what you should be paying attention to is what the APR will change to once the introductory period ends. Keeping a balance past the introductory period will cost you, as will missing a payment. Missing just one payment can make your interest rates skyrocket.

Grace Periods Otherwise known as "free periods" allow you to pay off the balance of your credit card before you incur interest charges. Grace periods can easily change so it is important to read your statements carefully.

Penalizing Bad Credit Your credit history can easily cause the credit card company to reassess the risk that you pose to them as a cardholder. The information on your introductory offer is subject to change depending on your credit score. While you may think that you are being offered the best credit card rates, those rates are subject to change based on your credit rating.

Many people believe that their credit score at the time of filling out an application for a credit card is what is used to determine their interest rate. A fact that few people realize though until it is too late is that at any time if your credit rating slips you may have your credit limit reduced and your interest rate increased.

Some think that if they make payments on 2 of their 3 cards that only one card will be affected. Those late payments on one card can lower your credit score and can quickly affect the other two cards, despite the fact that you may have a perfect payment record with those cards.

If you learn one lesson dealing with credit card debt, it’s that you need to make sure you read the fine print. Know your rights and more importantly you should know the credit card companies rights.

If you pay close attention to your statements and make sure to pay your balance each month you will save yourself thousands of dollars a year.

Share Opinion: