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Read Credit Card Agreements Carefully

When we decide to use credit cards, we are almost always required to sign an agreement…and some of us don’t even read what is in these agreements. However, whether you skim or review each part carefully, you still may not fully understand the agreement you are making with the credit card company.

News Center Maine spoke with a credit counselor who said that even she was confused by the fine print in a complicated credit card agreement. After taking advantage of a 0% financing offer, she paid the card off before the promotional year ended and when she went to use the card again, a retailer told her the account was closed for non-use…except it wasn’t. When she contacted the credit card company, they told her the account was still open and that the purchase she had just paid for herself was on the account. She was able to straighten out the issue but someone who didn’t follow up may have paid twice (with interest!) for the same item.

Even if you don’t read every word in a credit card contract, you should still be aware of some of the most important stipulations when you sign up for one.

Know your deadlines and time limits: You need to be clear how long special offers like 0% interest rate will last. And take note of how much time there is to make payments before you start to accrue interest.

Understand your APR (Annual Percentage Rate): If the APR is fixed, it will remain the same. However, if you sign on for a card with a variable APR, the changes to the interest rate on your credit card are beyond your control. 

Know that in general, the lender has the upper hand: You are signing an agreement with a credit card company that they have composed, and they are going to set things up to their advantage. As the women interviewed by News Center Maine learned, a company can close you credit card for any number of reasons (and they won’t necessarily notify you because that topic was probably included in the agreement you signed.) It is up to you to make sure you reap the benefits you want from a credit card.