Credit card agreements – all of those papers that come along with the new credit card – are well known for having fine print that outlines terms and conditions in language that can be difficult for the average consumer to understand. Often what you don’t know regarding the terms disclosed can hurt you. However, that doesn’t mean that you are responsible for knowing all of what is there. The basics of the terms and conditions should be understandable and if not, don’t accept the card.
The overwhelming quantity of fine print in credit card offers must be listed as part of the agreement for legal reasons. The credit card industry includes a lot of mandatory disclosures as well as some out of the ordinary clauses in the terms and conditions. And, this trend has increased over recent years, with the advantage going to the credit card industry. The more fine print to clutter the terms and conditions and the more likely the average consumer will ignore all of them.
Although certain people may consider some of the clauses sneaky and unfair, they are perfectly legal as long as the card issuer discloses their rights and intents in the terms and conditions. And, by signing on the dotted line, you assume an understanding of what is entailed in the terms and conditions. It is not necessary for you to become a professor of finance to understand these terms but you should be familiar with the most important terms and conditions consumer who fully understands what is included in the terms and conditions of any credit card offer that you apply for.
The first place to start is what is called the Schumer Box. The Schumer Box, is an easy-to-read table that includes fees, rates, and penalty fines. The Schumer Box was instituted by legislation to make certain credit card terms easier to read, the Schumer Box format is named for Senator Charles Schumer who introduced the legislation in Congress.
The Schumer Box includes:
Annual fee (if applicable)
Annual percentage rate for purchases (APR)
Other APRs (for balance transfers, cash advances, default APRs)
Grace periods for purchases
Finance calculation method
Other transaction fees (for cash advances, credit card balance transfers, late payments, and exceeding the credit limit)
Thanks to the standard format provided by the Schumer Box, comparison shopping for credit cards is a bit easier than it was prior to the enacting of the legislation.
However, there are many more items not included in the box that are also helpful for the cardholder to be aware of. These items appear in the terms and conditions of your credit card as mandated by law as well, however since they are not part of the Schumer Box you may find them buried in with the multiple lines of pine print in the credit card agreement. Some of these conditions are rather draconian and it is important to understand what there meaning is.
The following descriptive conditions are from actual credit card solicitations or agreements are a reminder of the many variations and pitfalls lurking inside your card.
“Disputes relating to the account are subject to binding arbitration.” The inclusion of this phrase in the terms and conditions protects the credit card companies from lawsuits and class action suits. If the cardholder has any problem or dispute regarding their credit card account, they are limited to an arbitration hearing. The arbitrator is chosen and hired by the card issuer, and the cardholder’s legal options are severely restricted.
“Balance transfer fees are added to the purchase balance and are subject to the APR for purchases.” This phrase states that the fees you pay for a credit card balance transfer are added to your any balances from purchase activity and you are charged interest on this combined total.
Many card agreements that have low introductory credit card interest rates will have a clause clarifying that the introductory rate does not apply to bank and ATM cash advances. You can owe a lot more money if you aren’t aware of this and think these actions also fall under the low teaser rate.
For those who ever wondered why one credit card company raises there rate after you were delinquent on another credit card. This is what is known as the universal default clause and acts as a way for the issuer to raise the credit cards APR for delinquencies on other accounts. Look for a phrase in the agreement that’s states, if the card holder is reported as delinquent on an account with any other creditor, we may increase the credit card APRs on your account up to the maximum Default APR.”
While reading credit card fine print disclosures is not most consumers’ idea of a good time, it can save serious aggravation and money down the line. So, be an informed consumer and make sure you know what’s involved before completing a credit card application for a new credit card. Find the best credit card the first time by reading the application and disclosures and get the best terms available.
Tags: best credit card, credit card, credit card apr, credit card balance, credit card balance transfer, credit card companies, credit card interest, credit card offers, new credit card
No user commented in " Fine Print In Credit Card Agreements "
Follow-up comment rss or Leave a TrackbackLeave A Reply