Most consumers that apply for credit cards seem to ignore or skim through the credit card terms and conditions. Every product comes with an instruction manual or a booklet that contains vital information that must be read and performed. You would not cook a tuna casserole without reading the instructions on how to properly prepare it for serving. Understanding the terms and conditions will prevent you from further credit issues such as credit card debt.
Cardholder Agreement: Terms & Conditions
The Cardholder Agreement is a binding contract between the credit issuer and the consumer and once you sign this document, you are also accepting the terms and conditions within the agreement. The credit issuer does not care if you do not understand the cardholder agreement, you are legally responsible for everything that is in the "fine print." Consumers always need to read the fine print before signing any legal documents.
Protecting your Credit Against Credit Card Solicitation
Credit card companies send millions of Americans credit card solicitations in the mail every month. To protect consumers from this type of solicitation, a law was passed in March of 2004 that includes a special section called the "Schumer Box." The Schumer Box is an abbreviated list that includes items from the credit card terms and conditions. The Schumer Box is included on all credit card offers, but the cardholder agreement thoroughly explains the terms and conditions in greater detail.
Information on the Credit Card Terms and Conditions
Every Cardholder Agreement has a section for interest rates and interest charges and a section for fees. The "interest rates and interest charges" section includes the annual percentage rate (APR) for credit card purchases, transfers, overdraft protection advances and cash advances. This section also covers how to avoid paying interest on certain purchases and the credit cards specific penalty APR.
The "fees" section of the Cardholder Agreement discusses specific fees such as the credit card's annual, transaction and penalty fees.
Warnings and Advice
The terms and conditions of your credit card can change at anytime without notice. Consumers rarely pay attention to introductory rates of a credit card offer. The "introductory rate" is only there to attract new customers from credit issuers and the annual percentage rate of the credit card will change over an extended period of time once this rate expires. Credit offers are frequently sent out to potential customers, but this does not mean that you will be approved for that offer.
Know the Credit Card Language
Read everything the creditor issues to you. Having knowledge of the credit card terms and conditions can prevent you from getting into credit card debt. Credit is used for everything; you cannot buy a house, a vehicle or even high-speed Internet without credit. Having a high credit score means that you are very responsible and trustworthy. Employers and creditors look for potential employees and customers that have strong character traits. Credit reflects your character so it is important to improve it.
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