A Reader's Guide to Credit Card Mailings (and
the Fine Print)
|
Source: Federal Deposit Insurance Corporation. (November 25, 2002). A
reader's guide to credit card mailings (and the fine print). Retrieved
October 23, 2006 from www.fdic.gov/consumers/consumer/news/cnfall02/guide.html
|
|
 |
Card solicitations and monthly statements
don't have to read like mysteries. Here's how to understand
the fees and rules... and avoid the pitfalls.
Card Solicitations
You're Pre-Approved
This doesn't mean you're guaranteed
a card. It means that you have received a firm offer
of credit based on criteria established by the company
for what it wants in a customer. You must apply for
the card and the company will conduct a full credit
check. If you don't receive the card or the terms
you were offered, ask the bank for the reasons.
|
|
|
Stopping Solicitations
Some people want to be on marketers' lists
for new product offers, but others don't. If you want to
reduce the number of offers for credit cards and other financial
products, call toll-free 888-5-OPTOUT (888-567-8688) to remove
your name from marketing lists provided to creditors and
other companies.
APR (Annual Percentage Rate)
The interest rate charged if you carry a balance
on your card. If you usually carry a balance, shop around
for a card with a low APR. If you pay off your balance in
full every month, the APR is less important than a card's
other costs or features. Also, find out if the interest rate
is fixed or variable and whether different interest rates
apply to different events (such as if you get a cash advance
from a teller machine or pay your credit card bill late).
Introductory Rates
Also known as "teaser rates," these
are very low interest rates offered to entice you to open
a new account. But as explained in the fine print, the introductory
rate may increase dramatically after six months or so.
Understand the terms of the offer. That low
introductory rate may only apply to balances you transfer
to your card from other loans or cards you have and not to
any new purchases.
Grace Period
The number of days before the card company
starts charging you interest on purchases. If you plan to
avoid interest charges by paying your balance in full most
months, make sure your card's terms permit that. It's getting
harder to find credit cards that give several weeks of interest-free
purchases. Some cards have no grace period, meaning you'd
always pay interest from the date of purchase.
Balance Computation Method
How the card company will determine the balance
on which you may be charged interest.
If you expect to carry a balance most months or if your card offers a short
or no grace period, the balance calculation method could be a big factor in
your finance charges. Perhaps the most common method is the "average daily
balance" approach, where finance charges are calculated on the daily average
for the billing period. Other calculation methods may be more costly, including
one called the "two-cycle" system where, if you pay in full one month
but only pay part of the bill the next month, you'll be charged interest for
both months instead of just one.
Annual Fee
Yearly charge for use of the credit card. If
you expect to pay your balance in full most months, look
for a card with a full grace period and no annual fee. However,
if you plan on carrying a balance or you're looking for club
perks, then a card with an annual fee and low APR may be
a better choice.
Other Fees
May include fees for late payments, charges
above your credit limit, cash advances, balance transfers
from another card, and certain purchases. Shop around for
the features you want and for the lowest cost.
Rewards
Incentives for using the card, such as
cash back or bonus points toward airline travel or the
purchase of a car. Be aware of the rules and restrictions,
including limits on how much you can earn or deadlines
for taking advantage of a reward. Also, compare the likely
value of the bonuses with the potential costs of the card.
Card Statements
Transactions
Open your bill immediately and check your
transactions. If there is a mistake, you can dispute the
charge and withhold payment for that specific amount. To
be protected by the Fair Credit Billing Act, you must send
a letter to the creditor that is received within 60 days
after the creditor sent you the statement with the inaccuracy.
Your letter also must be sent to the address the creditor
has specified for billing inquiries.
Periodic Interest Rate
If you carry a balance, check the periodic
interest rate on the statement, to make sure what you are
being charged is what was disclosed to you.
Pay close attention. Notice of a change is usually provided in your monthly
statements, so read the fine print.
Records
Retain your credit card statements and any
significant inserts received with your statement. You never
know when you might need to refer to them.
Note the date a payment was mailed, the check number and the amount paid.
About MINES & Associates
For over 25 years MINES & Associates has
been a nationally recognized business psychology firm that
provides a variety of services to corporate employers including
employee assistance programs (EAP), managed mental healthcare,
organizational development and psychology services, wellness
programs, behavioral risk management, disease management,
PPO services, and a number of other technology based services.
MINES & Associates is divided into two main divisions,
Organizational Psychology and Health Psychology, and currently
serves a diverse portfolio of clients in all 50 states, Canada,
Mexico, and the UK.
Please log on to http://www.minesandassociates.com for
the latest news and information on MINES & Associates.
Click
here for back issues.
|
Newsletters