Video: Credit card agreement -- Quick guide


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.


See related: Terms to look out for in card agreements' fine print," 2014 Penalty Rate Survey: The price of being late, Know your rights under the Truth in Lending Act

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 02-22-2019