3 Vital Reasons to Read the Terms and Conditions for Any Credit Card

When it comes to credit card terms and conditions, everyone would rather skip the technical jargon and jump straight to the rewards section. However, it is so important to be fully aware of the legally binding agreement we enter into with the credit card company.

Terms and conditions are a formal statement of the rules and guidelines that govern the relationship between the credit card issuer and the credit cardholder. It includes details like interest rates, fees, penalties, balance transfers, rewards, and offers.

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Besides knowing the credit card limit and payment due dates, we should be well informed about what we agree to as cardholders. Here are three vital reasons why we should read the terms and conditions agreement.

3 Vital Reasons to Read the Terms and Conditions for Any Credit Card
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Interest Rates

Understanding and comparing various interest rates can be of great value to you as the cardholder. All cardholders agree to an Annual Percentage Interest or APR for using the card, which typically ranges from 5% to 30% or more depending on the lender.

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Cardholders pay an interest charge on the amount borrowed on the card on a monthly basis, if the balance is carried over to the next month. If the cardholder, defaults on a payment, he will be charged a penalty APR.

As you learn about the various interest charges, you can maneuver your financial transactions to avoid unnecessary interest fees. For example, you can save on interest by transferring a balance from a high-interest card to a low-interest card or a card with introductory offers that charge 0% or minimal interest for a specific offer period.

Fees

To avoid being surprised at the large amount of fees we have incurred on our cards, it is best to know the fee structure in advance. Here are some of the fees that are usually charged on your card.

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Annual Fee

An annual fee is paid by the cardholder for using the card. He can also be charged a late fee if he defaults in making the payment before or on the due date.

Late Fee

The credit card companies can charge a late fee of up to $29 if you are late the first time and up to $40 if you are late in your payments for the second time in a period of six months.

Over-Limit Fee

Over-limit fees are charged if the cardholder crosses the credit limit issued to him.

Returned Payment Fee

returned payment fees can be incurred if the cardholder pays by checks that bounce due to insufficient funds in the bank.

Other Important Fees

Fees are also charged on foreign transactions, cash advances, and balance transfers.

Rewards and Offers

3 Vital Reasons to Read the Terms and Conditions for Any Credit Card

 

Rewards and offers on credit cards also have terms and conditions. The cardholder must read these carefully to be aware of how to qualify for these rewards.

For example, often there are certain types of transactions and purchases that earn points and rewards. Being aware of these transactions can be of advantage. Bonus points can also be obtained through sign-ups, which usually have a time limit.

Most cards also come with great introductory offers and cardholders must read them carefully so to not miss out on any welcome offers and rewards.

The Bottom Line

Take the time to read the terms and conditions of your credit card to avoid any extra charges, fees, and penalties. Doing so will help you save on interest while making the most of the rewards on offer.