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How can you comprehend terms and conditions of card holder agreement?

June 03rd 2013

Comprehending the wide array of information contained in the card holder agreement is not only time-consuming for several consumers but also boring too. The language, the technical jargons and long statements can be too overwhelming for some consumers. Moreover, most consumers don't have time or interest to read each word of the credit card agreement.

Although it is important to read the card holder agreement, yet you may avoid the hard work just by asking a few questions to the credit card issuer. Check out the 4 questions that you may ask the credit card issuer to understand the terms and conditions of the agreement correctly.

When will you have to pay the overlimit fees?

A lot of consumers still don't have any knowledge about credit limit and the overlimit fees, which is not good. You won't be able to cross your credit limit until you opt in for the overlimit fee. Ask the credit card issuer about the amount you'll have to pay for overlimit fee.

It's quite insulting to know from the cashier that your card has been declined. Overlimit fees save you from that disgrace after you cross the credit limit. However, as per the credit experts, it is best to not opt in for these fees since you may develop a habit of paying more than your means. You may get into severe financial problems at anytime.

When will you've to pay late payment fees?

You can never predict future. It is quite possible that you're confident about your payment capabilities. You may make a good amount of money every month. As such you don't have any worries about late payments. However, a fat paycheck doesn't guarantee that you'll make timely payments. You may just skip or forget the payment date.

Ask the card issuer about the consequences of making late payments. Find out when late payment fees will be imposed upon you. Ask questions regarding how much you've to pay for the late payment fees too and if they will increase your annual percentage rate as well.

How much will you have to pay for balance transfers?

Credit card balance transfer fees can drain funds from your account. If you're unable to calculate the fees properly, then you may have to pay a huge amount to the credit card issuer. Usually, card issuers charge a specific percentage of the overall transferred amount. Still, to be on the safer side, you can ask if there are extra charges. For instance: if a bank charges 4 percent fee, then you've to pay $400 for transferring $10,000 to the new low rate card. Don't forget to ask about how much will the interest rate increase after the introductory period is over. Usually, the rate gets doubled after the promotional offer expires.

Will you really benefit from the reward cards?

Usually, reward cards carry a high rate of interest. In fact, the interest rate is higher than that of a normal credit card. If you do carry a balance every month, then a reward card won't be that much beneficial for you.

As far as the airline miles card is concerned, you should ask the credit card issuer about the blackout dates. Ask when the credit card issuer will disqualify you for the reward programs. Will you lose reward points after getting delinquent on the credit card?

Secured credit cards help you repair your tarnished credit. The rate of interest is usually low and you can spend only up to a certain amount. However, some credit card issuers charge fees like annual fee, maintenance fee, application fee, etc. You may also have to pay fee for speaking with the customer care officer. It is better to know about these fees from beforehand so that you don't get a shock later. Ask if the card issuer will report to the credit reporting agencies. Your credit score will not improve unless the card issuer reports the payments to the credit reporting agencies.

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