Sifting Through The Credit Card Fine Print

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Shopping For A New Credit Card

You’re shopping for a new credit card and you’ve narrowed down the offers to a handful that seem right for you. This was no small task on your part as there are thousands of credit card offers available today, even scores from the same provider.

Picking the “winner” will depend on a number of things, key elements you value and expect from your card. Unfortunately, you may still be having a problem going through all of the fine print, trying to determine exactly what you’re getting and just what your responsibilities are as a card holder.

There is a way for you to determine if a particular card meets your needs without stinging you with a bunch of surprises later on. Thanks to the work of U.S. Senator Charles Schumer, every credit card must come with specific disclosure information, details known in the consumer industry as the Schumer Box.

The Schumer Box

The Schumer Box mandates the following information be disclosed with your credit card offer:

Annual Percentage Rate (APR) for purchases: The interest rate you must pay on your credit card balances. This line will tell you whether you are receiving an introductory rate and how long that rate will last. Many rates are variable and will change as the prime rate goes up or down.

Other APRs: Features the rates you will pay on cash advances and balance transfers if you choose this option.

Penalty Rates: On the same line as “Other APRs” the credit card issuer must tell you what your penalty rate is if you are late making payments and what action triggers the higher rate. In this example your interest rate suddenly skyrockets to 30.99%.

Method of Computing the Balance for Purchases: There are different ways a credit card issuer can compute balances. Average daily balance calculates your interest charges on one-cycle billing; while two-cycle average daily balance will mean you pay interest on debt you’ve already paid off. Choose the former if you want the better plan.

Annual fees: Most issuers do not charge an annual fee, but if they do that information must be included. Airline cards and some rewards cards typically charge a fee while most other cards do not.

What’s Missing?

Of course, the Schumer Box isn’t perfect as some information that consumer advocates say should be disclosed is hidden away within the fine print. These include:

Default rate applied to other creditors. If you are late with your electric bill, will your credit card issuer suddenly jack up your interest rate even if you are on time with them?

Rate hikes. If your credit card issuer has a provision where they can hike up your interest rate at any time or for any reason, then you’ll want to avoid these cards.

Ultimately, you as the consumer will make the final determination about a credit card offer and whether it is worth it to you. Do your homework and compare credit card offers to find the best card for your particular needs.

Tags: annual fee, Consumer Financing, credit card disclosure, Credit Cards, finance charges, penalty APR, rebate credit cards, rewards cards, Schumer Box