3 Details In The Fine Print Everyone Card Holder Should Be Aware OfFebruary 19, 2010 - 1:51 am
Credit cards have a fairly simple concept: small personal loans given to someone, which must be paid upon monthly. The problem is many of the lenders out there are not your friends. Many of the lenders rely on predatory tactics to make a considerable profit on their often naïve customers. So what are some of the ways that a consumer can protect himself when it comes time to apply for a credit card?
It is all in the fine print. Most of us don’t bother reading the entire credit card offer, but you should if you want to responsibly use a credit card. What are some of the details that you should look out for? First, you should find credit cards with a fair annual percentage rate (APR). Your credit history and credit score (a number which the credit bureaus use to determine your credit-worthiness) – whether it is good, bad or nonexistent – will affect what kind of credit lines you will be offered. Someone who has never missed a payment and has a well-established and varied history of credit (car loans, student loans, credit card loans) will have a much better credit score than someone who often skips paying their bills or someone who has never been loaned money. The average credit card APR is about 15%, but this may not be available to you, depending on your score. Do not accept a card that has an APR of higher than 30%, because it won’t be worth it in the long run.
Also, you want to determine what kind of rate the credit card holds – whether it is a “fixed” rate or a “variable” rate. These can greatly affect the kind of money that you will be paying on your credit cards. Essentially, the “variable” rate is tied to what is called the London Interbank Offered Rate, also known as LIBOR. This index rating can slide up or down, and the variable card’s rate will slide along with it too. A “fixed” card, although not truly fixed, will not follow LIBOR.
Finally, you should consider the APR for a credit card’s other uses, like a balance transfer or cash advances. Often times, these rates are different than the one for the regular credit line. Usually, they are much, much higher. An unknowing consumer could be taken by surprise when they go to pay their bill and see that their minimum payment for that much was much higher than expected because of a single cash advance. It is very important to stay informed when it comes to choosing your credit card – not reading the fine print will only get you a bad offer.