Read Each Agreement During the Application Process
Thursday, August 13th, 2009When you apply for a credit card, you are likely in a hurry to see if you qualify. Many consumers are looking forward to having a credit card to use for convenience or rewards points but many fail to be interested enough in what they are committing themselves to when signing the credit card agreement. If you do not read the terms and conditions of each and every card you are applying for, you can end up owing a lot more money than you ever imagined and can quickly find yourself in debt you can’t get out of easily.
If you don’t read your credit card agreement or the fine print section, you will likely miss the important things such as:
Fees
One of the quickest ways to accrue debt aside from spending is the accrual of fees on your credit card account that you had no idea existed. Credit card companies these day make a profit on the fees they are charging their customers and until the new credit card regulations go into effect, you need to keep a close eye on what charges to expect. Late fees, penalties, over the limit charges, and even annual fees can rack up a decent amount of money many consumers do not realize they have to pay and therefore do not budget accordingly.
Variable Rates
Credit card companies have been taking a lot of flack over the last year from consumers who had no idea interest rates could be changed at the card company’s discretion with only minimum notice to the card holder. When interest rates made a big jump across the board, consumers were mad but had little fighting power when they realized the variable rates were part of the original cardholder agreement. Many agreements state the changes can come at any time and some for no reason at all. Accruing interest rate charges at 35% when you only thought it was 15% can do a lot of damage to a personal financial plan.
Promotional Rates
There is a lot of interest in interest-free credit cards but there is also a lot of confusion. Many consumers who are thrilled to have an interest-free credit card fail to realize that the interest-free time period only applies for a certain time, usually 6-12 months. After the promotional period ends, the interest rate they will be paying on purchases will be considerably higher.
Rate Levels
There are many times when a credit card company offers promotional deals and rates that only pertain to some purchases made on a card, while others hold fast to the regular rates. If you are not aware of how your interest rate levels can vary, you can end up overspending your money. For instance, you can make a regular purchase that qualifies for the interest-free promotional rate but get hit with a huge fee for the cash advance you took out of the ATM, which you really could not afford to pay back.
While it may be frustrating to have to read the small print that goes on for pages before you get a credit card, it is in your own best interest to do so. Otherwise, being left in the dark generally will result in your owing money you can not afford to owe or being held accountable for things you were unaware of. Remember also that credit card agreements are not all the same so thinking that just because you read one does not mean you have read them all. If, at any time, you do not understand terminology or the agreement terms, be sure to contact the company directly and get the answers you need before making a commitment to any credit card company.
