The 5 Most Overlooked Credit Card Terms
Sunday, February 10th, 2008When you receive a credit card application in the mail, the first thing that you should always do is to read the terms and agreements of the card. When that card is applied for and received, the first thing that you should do is to read the informative disclosure pamphlet that comes with it. Unfortunately, many people fail to take these precautions. And those who do often just look at the basic items, like the APR and the annual fee, and then don’t read the rest of the information. This results in a number of credit card terms that are overlooked by consumers, usually to their own detriment.
Here are the top five most overlooked credit card terms and benefits:
1. Fees. Believe it or not, many people neglect to read about the fees that are incurred for things late payments and spending beyond the credit line. This can mean making excessive payments for not following the rules.
2. Rewards expirations. Most people do read what kinds of rewards they get and how to get them. What they neglect to read is the information about when those rewards need to be cashed in before they expire. This is particularly true of people who use airline credit cards.
3. How payments are allocated. Many people have cards that include different types of payments on them and those payments are processed at different APRs. For example, you might have a card that has a balance transfer at a rate of 5% and purchases at a rate of 18%. What people fail to realize is that their payments are allocated in such a way that the lower interest rate balance is usually paid off first. Make sure that you know how payments get allocated before combining rates on a card.
4. Insurance and protection. Some credit cards come with various kinds of insurance and protections. For example, when you purchase a faulty product on certain cards, you can get your money back through the credit card. Many people fail to take advantage of perks like these because they don’t know about them. Another common one is that your card may cover rental car insurance so you don’t have to get it when you travel.
5. The legalese. In rare instances, you might find that your credit card company is so bad that you want to sue them. You’d better read the fine print on those terms to see what the rules are about suing them and what state you’ll have to do it in.
By making sure that you read through all of your credit card materials carefully, you protect yourself from harm while giving yourself the chance to access better benefits on your cards.
