Understanding the Fine Print on a Credit Card Application
Having a credit card can be a blessing or a curse, depending upon how it is used. Much of the financial agony involved with credit card debt could be avoided if consumers would make a conscious effort to carefully read the fine print of the credit card application before applying. Understanding the fine print on a credit card application will help the consumer be prepared for any fees or other pitfalls that could occur while using the card.
Fixed or Variable
Perhaps the most important factor to consider when applying for a credit card is the interest rate, because it will ultimately determine how much money is spent on monthly repayments. The interest rate, also known as the APR (annual percentage rate), is either fixed or variable. A fixed interest rate is generally more desirable because it will not change unexpectedly, whereas a variable interest rate is subject to change literally without notice. Although fixed interest rates are preferable, it should be noted that they can also be changed by the bank, however the cardholder will receive a 2 week notice before the rate changes.
Introductory Rate
Many cards come with a 0% APR introductory rate, which means that no interest is charged for a certain period of time after the cardholder receives the card. Other cards will offer low introductory interest rates that are higher than 0% APR. The length of the introductory period and the introductory rate will usually depend upon the credit score of the applicant and the specific card issuer. When reading the fine print of the application it is important to note the length and interest rate of the introductory period. It is also important to note what kind of purchases the introductory rate applies to. Cards that apply the introductory rate to all purchases and even balance transfers are preferable.
Due Dates
It is also important to analyze the due date terms listed on the credit card application. The repayment terms and conditions vary between each card company, so it’s best to review this information when reading the fine print of the application. Some credit card companies used varied pay cycles, which means the cardholder can designate a pay date of their choosing. These cards are generally preferable because they allow the cardholder to choose a repayment date that coincides well with their financial situation.
Selecting the Right Card
The above information can very helpful when selecting a credit card, but there are some aspects of the applications that may still be unclear. Any questions concerning a specific card application should be presented to a bank agent that is qualified to provide accurate information. Although many credit cards fall under the aforementioned criteria, it is important to remember that applying for too many cards at once can negatively affect credit history. This is because all applications are noted on the applicants credit history, especially declined applications. Being declined for several applications in a row can lessen the chances of being approved for the right card. Thus, it is best to apply for one card at a time, and choose each card carefully.