You’ve probably seen hundreds of credit card ads in your lifetime, and regardless of whether the offer is on a billboard, in a magazine or in the mail, they all look relatively similar. Each offer promises you something amazing, such as zero-percent interest, printed in a very large font, followed by a page or two of details printed in such a small font, you would need a magnifying glass to read it.
Grab that magnifying glass, because it’s the fine print that matters!
Credit card offers are designed to suck you in with shiny distractions. Credit card companies know that most people will be so preoccupied with the big letters that they’ll sign up without reading the fine print. This fine print may inform the applicant that the low- or zero-interest offer only lasts a few months, that any late payment will cause the interest rate to skyrocket or that there are fees just for having the credit card. However, once you’ve signed the agreement (which you have to do to apply for the credit card), you are bound by the creditor’s rules, whether you’re aware of the stipulations or not.
It is time consuming and painful to read the fine print, but the amount of information tucked away in that small print is what will make or break your credit score. What you’ll find in the fine print is that credit card companies reserve the right to change their terms at any point in time, even if you’ve been playing the game according to the rules. This means they can, with notification, change your interest rate, your repayment amount, the fees they charge or any other point specified in the agreement. You are at the mercy of the credit card company.
In the fine print, you will discover that while you may be pre-approved for a credit card at a low advertised rate, the actual rate you receive may be based on your credit score and other factors. You may apply for zero interest but be approved for 18 percent. And even if you do get the low advertised rate, the fine print tells you that the rate will increase (typically within six to twelve months) and that if you miss a payment or make a late payment, your introductory rate will be pulled.
So how do you know when “late” is? That is in the fine print, along with the fact that the creditor may change the payment due date at will. You may have started on a 28-day grace period, but it could be cut short to 20 days. A given card payment may be due by 5 p.m. while another will be due at noon. It is very important to know what constitutes as “late,” to avoid getting hit with fees and higher interest rates.
Hidden fees are another favorite of credit card companies, and where better to hide them than in the fine print? Hidden fees apply to more than just late payments. For example, overdraft protection can be useful, but not if your fees cost you more than what you have overspent. Additionally, transaction fees can also be a surprise, such as when using your card for a cash advance. Also buried in the fine print is a message that says no matter what the credit card offers in big, shiny letters, there are no guarantees.
As with all agreements, it is essential that you read the fine print. Applying for a credit card because the offer is appealing on its surface can put you at risk of breaking rules you never knew existed. Credit card companies deliberately put their terms in fine print, because those specifics are what make them the most money. Before you agree to any terms, make use of that magnifying glass!