How To Decipher Credit Card Offers
Credit card offers can be tricky to decipher. You may think that all you have to consider are interest rates and annual fees. Well, not exactly. Over the years credit card companies have been making their fine print even more complex. There are a few things you should look out for when reading the fine print (and make sure you do read it!).
Avoid having a universal default clause in the fine print. This means that if you are late, even one time, on a utility bill or other credit card your interest rate may jump. Anything that lowers your credit score, with this clause in effect, the company can raise your interest rates without consulting you.
Some companies will not include this kind of default clause, but will use other methods to raise interest rates. Look out for change in terms provisions. This change in terms may discuss the lender’s ability to raise interest rates at a particular time, or for whatever reason. Look for a card that is specific about why and how they raise interest rates in order to avoid these mishaps.
Credit card companies usually base their finance charges on the daily balance amount you have on the card for that particular month. Other companies use the adjusted balance billing, which is preferred as a customer. This will calculate the interest only on the balance that is on the card at the beginning of the billing cycle. Avoid cards that have a two-cycle billing, this method calculates finance charges based on the average daily balance for the last two months.
Some cards will try to entice prospective customers with a no annual fee indicator. Although they will not charge you an annual fee per say, companies can charge service fees as well as minimum finance charges on a monthly basis. These charges can easily add up to the amount of an annual fee! Many times, they will add up to being more expensive than an annual fee.
If you are the type of person who pays off your balance each month, than you can benefit from a card that offers a grace period. This grace period will give you at least a 22 day stall before they begin to charge you an interest fee on a purchase you have made. This is only if you have not carried a balance over from the past month.
Reading the fine print can be difficult on credit card offers, especially if you do not see it! Most credit card companies do not even include all of their terms and conditions until you actually get the card in the mail. Avoid getting caught off guard by checking out the company’s website.
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