Understanding Credit Card Applications
When you get a credit card application, you may be surprised to find that it's so easy to fill out. Many times, the application is for a pre-approved credit card that only requires your signed application to be returned and you'll be rewarded with a credit card that's promoted as being a means to financial rewards. Make sure that you read and understand all of the terms on the credit card application before you apply to open a new line of revolving credit, or you may find out that you are putting your financial stability on shaky ground.
What the Terms Really Mean
Read all of the literature that accompanies the credit card application. Be sure that you read every single word and that you completely understand the implications. For instance, if your card offers you an annual percentage rate as low as 0%, your approved line of credit may kick in an interest charge on balances that remain if you don't pay it off entirely. You have agreed to an unknown rate of interest that could be as low as 0%, but could just as well be a lot higher. The interest rate that the credit card gives you depends on your credit score. The lower the score, the more interest you are likely to be charged.
Introductory rates up to a year mean that the benefits that are used to promote the credit card could be for a shorter period of time, and an unwary consumer could be charged higher interest if the 'up to' part of the credit card application wasn't understood as the plastic is used to purchase items charged in the hopes of paying off the balance during the coming year.
Introductory interest rates that are much lower than the national interest rate also make a credit card application look appealing to a consumer who is looking for a good deal on a credit card. Make sure that you know how long the introductory period is, and what rate of interest that you will be charged after the introductory term expires. Know that if you make a late payment during the introductory period, the credit card company can immediately cancel the introductory rate and charge you a higher rate of interest as well as late fees and charges.
If the credit card that you've been invited to accept charges an annual fee for the benefits that you get by accepting the offer to apply, don't expect the information to be prominently displayed on the credit card application. This information will appear elsewhere in the literature that accompanies your application or on the back of the application itself, in all of the legal information in the small print. It is up to you to read every word and understand the implications of the contract that you are entering into.
Understanding credit card applications includes understanding the fees. Fees may also apply on transferred balances, even if the credit card specifically invites you to make your credit debt more manageable by consolidating all of your open lines of credit to the card they are offering you and make only a single monthly payment. It only makes sense that if you can consolidate all of your credit debt that is only growing because of accumulating interest and service charges to a card that charges you 0% interest for a year, you will be saving money. By making regular payments interest free for twelve months, you can really make a large chunk of your revolving credit debt disappear. Just make sure that this is what you are being offered before you sign the application.
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State Guides to Credit Card Laws
- North Carolina
- West Virginia