Credit Cards: Fine Prints of Credit Application
Nobody knows for sure how many credit cards are actually floating around in
credit space. Credit space is my newly minted term for the aggregate number of
credit cards actually issued.
Truth is, if you are average, you have eight credit cards so you occupy 8 parts
of the universe now known as credit space. You also carry between ten and
fifteen thousand dollars in credit card debt.
If this is true, you also are paying fees, charges and interest on this debt.
Because these fees, charges, interest rates can vary drastically among credit
card issuers it pays in real money to shop around.
Credit card offerings are made to seem like great deals. They are until you read
the fine print and all of the disclosures. Here, along with an explanation, is
what the law mandates be made clear to you during the application stage:
Annual percentage rate (APR)-The APR is a measure of the cost of credit,
expressed as a yearly interest rate. Usually, the lower the APR, the better for
you. Be sure to check the fine print to see if your offer has a time limit. Your
APR could be much higher after the initial limited offer.
Grace period-This is the time between the date of the credit card charge and the
date the company starts charging you interest.
Annual fees-Many credit card issuers charge an annual fee. The fees range from
$15 to $55.
Transaction fees and other charges-Most creditors charge a fee if you don’t make
a payment on time. Other common credit card fees include those for cash advances
and going beyond the credit limit. Some credit cards charge a flat fee every
month, whether you use your card or not.
Customer service-Customer service is something most people don’t consider, or
appreciate, until there’s a problem. Look for a 24-hour toll-free telephone
number. Your card is apt to be lost or stolen at 2 in the morning just as it is
at noon. You will want to be able to notify your credit card issuer as soon as
you learn your card is gone.
Other options-Creditors may offer other options for a price, including
discounts, rebates and special merchandise offers. If your card is lost or
stolen, federal law protects you from owing more than $50 per card-but only if
you report that it was lost or stolen within two days of discovering the loss or
theft. Paying for additional protection may not be a good value. In fact, buying
credit card insurance is fool hardy and you are throwing good money after bad.
If you follow the law and contact your credit card issuer in those two days,
your only obligation would be $50 and often times the issuer will waive that $50
if you’ve been a good customer.
It is easy to get a credit card solicitation in the mail but it is hard to
select the card that is right for you. The above information however should help
in making an informed decision.
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