Credit card fine prints: How they affect the intro APR, Annual fees and credit card spending limits

Duran Mueller
May 3, 2007
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Almost, every credit card advisor worth his salt will tell you to read fine prints carefully before deciding on the credit card. Despite all the explaining this fact is often overlooked. How fine prints can affect the ownership of credit card? This article takes a look at the murky credit card world. You will be astonished how, these large sentences in small fonts, asterisks and special symbols can change the way credit card benefits you. We take a look at how fine prints can change the three most important benefits viz. 0% intro APR, the annual fees and credit card spending limits.

1. 0% Intro APR

Ok, the credit card states that it has a 0% intro APR. But what does it relate to, purchases, balance transfers, cash advance what exactly? Check it out. And about the length of 0% Intro APR period-- one fine print states that-- The length of your introductory period will be either 6 months for purchases and balance transfers or 3 months for balance transfers, depending on our review of your application and credit history. This adds a lot of ambiguous element to the APR. Next thing to bother about 0% intro APR is what defaults will terminate the benefit, for example: If a person makes a late payment the introductory or special rates terminate instantly and standard purchase rate apply. If you default twice the APR rate increases to 18.5% and if you default thrice, the APR will jump to 24.99% and so will be the interest on cash advances. Now do you see the 0% Intro APR hitting below the belt! So read the fine print always and get the facts clear about credit card straight from the issuing company.

2. Annual Fees

You must've seen various credit card offers stating -- No, annual Fees*. Some people straightaway make the conclusion that the credit card won't cause them a penny for ownership-- and that too for life. Are the credit card companies that naive? Will they let you go so easily? Didn't you see the * after No, annual Fees. Yes, that asterisk (*) could spoil the honeymoon of No annual fee for you. It could lead to a page where written in very small fonts are lines that could mean -- The annual fees for the credit card will be waived for the first year. Thereafter, the annual fee will be $45 for the Basic Card. And If you default on repayments for a certain period the Annual fees will apply instantly. Any waivers, or benefits will cease instantly! So, take extra care of those asterisks.

3. Credit card spending limit

A credit card with no preset spending limit can excite a consumer so much that he runs straight to the credit card company to get the card. But, buried somewhere in fine prints he will find the statement-- The credit card has no preset spending limit which gives you purchasing power that adjusts with your use of the Card. No preset spending limit does not mean unlimited spending. Your purchases are approved based on a variety of factors, including current spending patterns, your payment history, credit history, and financial resources known to us. So, things change suddenly. Credit card companies will allow you to overspend even beyond the credit limits and happily slap you with a over-the limit credit fees. So, even if you spend 1 dollar above your spending limit you could be slapped as much as $30 for crossing your credit limits. Strange but true, borrowing 1 dollar will cost you $30 extra.

Many things can be said about fine prints, every fine prints tries to apply certain restrictions, or explain a controversial point which credit card companies shy away from writing in bold. These fine prints weigh heavily towards the credit card company, and if a consumer doesn't read it carefully he falls into the trap.