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How to Read Credit Card Fine Print

Man Checking Credit Card StatementThe fine print that comes with signing up for a credit card can be full of industry jargon that may not be familiar to you. It is designed to keep you from paying attention to the details even though it contains important information you need to know.

Where is the fine print on my credit card application or statement?

You can find this information on the credit card’s paper or digital application under a label marked “Pricing and Terms,” “Terms and Conditions,” “Interest Rates and Fees,” or “Offer Details.”

Locate your credit card fine print on the back of the bill. This information will include reports to credit bureaus, how your interest rate on the balance is calculated, how you can avoid paying interest on your purchases, and how to dispute fraudulent charges on your bill.

To find this info, look for an asterisk (*) or dagger (†), which indicates small-type footnotes at the end of the page or document.

12 credit card terms you need to know:

  • Accrued interest – The amount of interest incurred on a credit card balance as of a specific date.
  • Annual Percentage Rate (APR) – The rate of interest paid on a carried credit card balance each year. The amount of interest charged each month will vary according to the current balance. This number is determined by dividing the current APR by 12 to get the monthly APR rate, and then multiplying that number by the current balance.
  • Annual Fee – The yearly fee a financial institution or credit card company charges the consumer for having the card.
  • Balance – The amount of money owed on the credit card bill.
  • Billing Cycle – The amount of time between the last statement closing date and the next.
  • Calculation Method – The formula used to calculate the balance. The most common is the daily balance method, where charges are calculated by multiplying the day’s balance by the daily rate, or by 1/365th of the APR.
  • Cash Advance – Money is withdrawn from a credit card account. Cash advances usually have strict limits, higher interest rates, and fees.
  • Credit Limit – Also known as a line of credit, this refers to the maximum amount of money that can be charged to your credit card.
  • Default Rate – Also called the penalty rate, this refers to an especially high rate of interest that kicks in if the consumer is late in making monthly payments and/or has violated the terms and conditions of the card.
  • Grace Period – The time between making a purchase and being charged interest on that purchase.
  • Late Payment Notices and Fees – These will alert the consumer to a missed payment and its associated fee.
  • Minimum Payment – The smallest amount of money the consumer can pay each month to keep the account current.

Common claims you might find on an application and what the small print below these claims says:

Claim: Sign-up bonus: $950!
Fine print: Must spend $3,000 on the card within the first three months of ownership. Redeemable only at participating airlines.

Claim: Interest-free offer!
Fine print: Expires after 18 months, the same time a 22.5% interest rate kicks in.

Claim: 0% balance transfer!
Fine print: With a $300 balance transfer fee.

Claim: 5% cashback on grocery spending!
Fine print: Capped at $1,000 per quarter and only at participating grocery stores.

Claim: Cash advance of up to $1,500!
Fine print: With 20% interest and a $200 cash advance fee.

Claim: Generous 25-day grace period!
Fine print: We reserve the right to shorten the grace period at any time.

Do I need to read all the fine print?

The large print is designed to grab your attention and make you sign up for the card immediately, while the small print contains all the qualifiers, exclusions, justifications for future cancellations and more, about these claims.

This is just the beginning of all that you can learn about credit, responsible credit card ownership, and debt. Solidarity has set up a Learning Center to help you navigate your way through to financial literacy. We know it’s tricky, and we know it’s a lot to learn. Start with us and we’ll guide you the whole way through.

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