Video: Credit card agreement -- Quick guide
By Kristin Wong
Your credit card terms and conditions can be a little overwhelming. You don't bother to read your credit card's fine print? You aren't the only one.
But when signing up for a new card, it's important to know what you're getting into. To make it easier, we've created this short list of the most important terms to watch out for, and what they mean.
Ayub Meza represents ClearPoint Credit Counseling. He says interest rate is an especially important term to look out for, especially if there's a chance you won't pay your card each month.
"Check what the interest rate is," Meza says. "If you're going to get a promotion, try and pay before the promotion ends."
Your interest might be represented on your terms as an annual percentage rate -- look for the letters "APR." This is the annualized rate you'll pay each year on your account balances. Keep in mind, you'll likely have to pay interest for each billing period that you don't pay your balance in full.
Also, it's important to know why your rate might change -- and to what.
Almost all cards on the market today are variable rate cards, pegged to the prime rate. The prime rate, in turn, moves when the Federal Reserve changes a key rate called the federal funds rate.
Your rate could also jump if you're more than 60 days late. And you could have yet another rate if you do a balance transfer.
You should also know all of the fees associated with your card. There are late payment fees, penalty interest rates, cash advance fees, even annual fees for simply keeping the card open.
"Some can be monthly fees," Meza says, "some could be an annual fee. It just depends. Every card is different, so you just have to check."
A credit card issuer may also offer something called credit protection, or payment protection. This is, essentially, an overpriced insurance policy. Don't buy into it.
The fine print might be a little intimidating. But knowing the most important terms to look for can help you avoid any credit card trouble.
Published: January 27, 2015
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