How to Figure Out the Fine Print while Buying Credit Cards

Abhinay Dhole
Abhinay Dhole

Would you ever sign on an employment contract without reading it? No, right. Most of you are cautious about signing on the dotted line of any legal contract. However, when it comes to credit cards agreements, most of you would give it a miss. Credit cards come with several pages of fine print that most of you tend to overlook. With good reason as it is in a language that an average reader may not understand. Use of legal jargon and too many terms and conditions may dissuade you from giving it a read.

Are you fully aware of any surprise fees, interest rates, late payment charges for your credit card? Chances are that you may know the basic charges but the details may throw you off. You may be surprised to know that some of these fees are beyond your imagination. Unfortunately, you can’t do anything about it as you have already signed on the contract.

The fine print contains pieces of information such as terms and conditions. Apart from that, many other details are mentioned in it. You may have to pay a heavy price for overlooking this information.

Don’t worry if you find the language difficult or if too much text intimidates you. We have broken it down for you.

1. Charges and fees

The contract carry charges associated with your credit card. APR or Annual Percentage Rate is the interest that you need to pay on your balance. Annual fees, penalty fees, foreign transaction fees, credit card balance transfer, cash advance fees etc. are all mentioned in this agreement. You will attract the highest charge if you won’t pay your bill in full by the due date.

2. Grace period

You get free credit for this period. You get charged with an interest if you exceed this time. You get a grace period for your purchases and other transactions like a cash advance.

3. Complete details of introduction rates

Most banks would try to attract you by giving low-interest rates as introduction offers. However, these rates will expire after a stipulated time period. Read carefully as to understand the rates after this offers expires. What happens if you owe something to the bank after this time period. Usually, this would attract high-interest rates.

4. Don’t miss any communication from the bank

Somewhere in those blocks of text, it is mentioned that your bank holds the right to hike the interest rate. There are various factors that can lead to this like the end of a promotional offer or late payment. The bank will notify you about this via either email or a written communication. It is thus advisable to read all the communication regarding your credit cards.

5. Repercussions of late payment

Do you know that there are two ways by which late payment can affect you? You most certainly know of the late payment charges. However, do you also know that it can also lead to increased interest rates? Set reminders so that you never miss your bill payment date.

6. Protection against arbitration

The language of credit card agreement is such that it favours the credit card issuer. Usually, there is an arbitrator specified for any future disputes. This is done to protect the issuer from lawsuits and legal action.

7. Fixed rate APR is not so fixed

This is the information you must seek if you bought your credit card assuming the rate was fixed. Always remember that your issuer can increase the rate any time as per their wish. Usually, they will increase the APR if you do not pay your bills on time. Other reasons will be mentioned somewhere in the fine print.

8. Closing your account

Repeated instances of non-payment of bills may lead to the closure of your account. While this is an understandable reason, the card companies can close your account for other reasons as well.

9. The responsibility of another user

You are 100% responsible for any unauthorized access to your card. You are also responsible for any reckless spending by a known user. If you wish to block your card, you have to inform the credit card company. Similarly, you have to inform them if you want an add-on card.

10. Rewards point

Most of you get credit cards for the attractive reward points. However, you get these rewards only when you pay your bills on time. Repeated behaviour of late payment

Dig into the fine print when any credit card offer seems too good to be true. That is where the reality is. You will be surprised to find that many offers have a conditional clause attached to them. You most certainly will overlook the fine print, as you are more likely to focus on the positives. With the guidelines given above, you now know what to look for.

Abhinay Dhole
Abhinay Dhole

Abhinay is an IT Engineer turned content writer. He has a keen interest in the mutual funds industry and closely follows the market movements. He has been working in the personal finance domain for over 2 years.

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