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Credit Card Terms And Conditions - A Closer Look
By: Kevin Erickson
It's sad but today most credit card companies are devious and they've designed
everything possible into the fine print of their terms of service to catch you.
Therefore, when looking at any credit card offer, make sure you take a close
look at the fine print.
Believe me, I am fully aware that it's purposely put together to appear like a
maze, but because it's so vitally important to your financial well-being and
with the current trend towards "relatively" easier-to-read summary boxes you no
longer have a legitimate excuse for ignoring the terms of service.
That being said, I've outlined a few of the key aspects to look for that are
normally "hidden" away in the fine print of most credit card offers.
The Annual Fee
Although it's not as common as it once was, it's still around. Especially, on
the so-called higher status Gold and Platinum cards which still tend to charge
much higher fees than the "basic" credit card. Annual fees are simply an easy
way to get another $39.95 to $79.95 or more from each and every customer. It may
not sound like much but it adds up when you've got millions of customers. If you
give the company a call you can normally get it waived and if they won't then
don't take out the card or cancel the one you've got - it's the principle of it.
Late Payment Fees and Penalty Charges
Cash advance fees, late payment charges and exceeding your credit limit are the
types of fees you need to pay attention to when checking out the fine print.
Many cards have unjustifiably high fees and if they do you shouldn't sign up for
them. Just say no!
Calculating Interest
Because it's so hard to understand (they make it that way on purpose) this is
often one of the most overlooked, yet important aspects hidden away in the fine
print. There are basically three methods being used to calculate interest on
your balances.
Adjusted Balance
Not as common as it once was but some companies are still using it. In a
nutshell, you are charged interest on whatever your balance was on the day the
company sent you the bill.
Previous Balance
Basically, this method is simply a horse of a different color. In this version
you are charged interest on your balance as it stood at the end of the previous
billing cycle regardless of how much you've spent or paid off since. Some
consider this a tad bit easier to understand.
Average Daily Balance
Last but certainly not least. This method is currently the most common and it's
also the most complicated. Using this method your balance is added up at the end
of each day in the billing cycle, it's then divided by number of days that have
transpired in that billing cycle and interest is charged in this amount. I know,
clear as mud.
If your balance jumps around this method may be slightly better for you than the
other methods because it keeps you from paying full interest on a balance that
just happened to be large on the billing date.
You should also be paying attention to the monthly rate of interest rather than
just relying on the APR. APR is an estimate of the total cost of borrowing but
it's the monthly interest plus the various fees and charge that will show you
exactly how much you are paying.
Grace Period
This is extremely important for about 40% of all credit card holders because
that's the approximate number of people who pay off their balances each month.
It's also important for the remaining 60% because then you can avoid interest on
new purchases for the first 30 days or so. As a result, make sure that the card
you're looking at has a grace period on purchases; otherwise, you could end up
being charged interest from the moment you buy something. On the other hand,
virtually no credit card company offers a card with a grace period on cash
advances or credit card checks.
Currency Conversion Fees
This only applies if you plan on using a card outside the country. If it does
apply to you, take a look at what you'll be charged for transactions made in
other currencies. Some cards are much more expensive than others.
This article may be reproduced only in its entirety.
About the Author:
Kevin Erickson is an entrepreneur and writer. You can find more of his work at:
Credit Card Debt Consolidation | Debt Management Program | Debt Consolidation
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