Understanding the Terms of Agreement

Have you ever heard the saying "Read the fine print?" Well, there is a good reason that phrase exists, especially when it comes to those enticing credit card offers you get in the mail. They are designed to grab your attention—using promos such as "NO ANNUAL FEE" or "0% interest for 12 months," which can be very appealing to the average consumer. Many consumers are taken in by these promotions, and apply for the credit cards based on the great offers. Many times, they are in for a surprise. Our Consumer Credit Counseling Services (CCCS) agency warns that these offers are never as simple as they appear to be. It is critical that consumers fully understand the terms of the offers BEFORE they apply for the credit card.

Consumer Credit Counseling Professionals Say Education is Key

So, are the credit card companies doing anything wrong? Although it may not be apparent at first glance, they are providing you with all the terms and conditions of the credit card upfront. It is just up to you to read and understand them. The terms and conditions are spelled out (in fine print) in what is known as the cardholder agreement.

Our Consumer Credit Counseling Services (CCCS) agency emphasizes that educating yourself on the terms and conditions of the cardholder agreement before you enter into a contract will help ensure that you stay in control of your financial situation in the long run. They regularly counsel consumers whose debt problems have been exacerbated by the fact that they were not fully aware of the penalties that a credit card company could impose on them when they did not comply with the agreement.

Consumer Credit Counselors Translate the Fine Print

Required by the Truth in Lending Act, the cardholder agreement provides detailed information outlining the cardholder's rights and obligations once the credit card account has been established. A cardholder agreement typically includes credit information such as your credit limit, grace period, interest rate, fees such as late fees and over-limit fees, among other information.

It is vitally important to familiarize yourself with all the terms related to consumer credit and cardholder agreements. Below is a list of some of the fees that could be applied to your credit account:

• Annual fee – Applied to an account once a year to maintain the account. Each creditor may charge different amounts.
• Balance Transfer fee – This fee may be applied to an account if outstanding debt is transferred from one account to another.
• Closed Account fee – This fee is sometimes charged for closing a credit account, if it has not been open for a pre-disclosed length of time.
• Late fee – A monthly charge applied to an account if the account holder does not pay the minimum required payment amount on time.
• Over the Limit fee – A monthly charge applied for exceeding the credit limit.
• Penalty fee – Although each creditor handles this differently, they may increase the annual percentage rate on an account if two or more payments are made late.

Consumer Credit Counseling Advice – What to Know Before You Commit

The best advice to keep in mind, according to consumer credit counseling professionals, is that the creditor reserves the right to change the terms and conditions of the credit card at any time. Here are a few more consumer credit tips:

• The initial offer does not include ALL of the terms of the credit card. Only the Cardholder Agreement details every term on the account.
• Just because the credit promo offers you a particular credit line does not mean that you will be approved for the same amount. You can receive a much lower limit than what was originally offered, or you may be declined for the account all together.
• Be on the look out for the term "fixed introductory rate." This interest rate is often low, but only for a "fixed" period of time. The interest rate can increase dramatically after that and can become a variable rate.

How Our Consumer Credit Counseling Services Can Help

If you would like a professional to help educate you on the ins and outs of credit cards and cardholder agreements, contact a reputable consumer credit counseling service such as an NFCC-approved CCCS agency. A credit counselor can also provide you with an action plan to reduce your credit debt and counsel you on ways to make wiser spending decisions. Contact one of our credit counseling (CCCS) offices today for a one on one confidential session to determine how to be an educated consumer and better your financial situation in the future.