Info about Print Shops
The Notorious Fine Print
Everything in the Schumer Box is must-know information, and it pays (literally!) to understand other details as well. If you become familiar with common fine-print phrases, such as the following four examples, you won’t end up being sucker-punched by the bank, and you’ll be in a position to take maximum advantage of your cards:
• …if the cardholder is reported as delinquent on an account with any other creditor, we may increase the APRs on your account up to the maximum default APR.
This controversial clause, commonly known as universal default, means that if you’re late paying another bill, the interest rate on your credit card could be raised. In fact, if your credit score is lowered for any reason (late payments, high debts on loans, and so on), the universal default clause can be activated. Yes, that’s true even if you have a perfect bill-paying record with the card issuer.
Unfortunately, many card issuers now practice universal default, raising the rate on new and existing balances, even when they don’t call it that. On a positive note, some issuers are starting to distance themselves from universal default, and soon, new laws may require any interest rate increases apply only to future card debts.
• Universal Default in Action
Courtney, a frequent poster on the CardRatings.com forum, was surprised to find
that the APR on her card had been raised from 8.99% to 18.49%. When she called the lender, she was informed her credit record revealed a “high debt-to-income ratio” that made the issuer decide her risk as a borrower had risen.
“I consider myself to be very capable with my finances,” says Courtney. “But I’ve had a few years when I ran up more debt than usual, including a home equity loan. I made all of my payments on time, but evidently, my new debt affected what used to be a stellar credit record.
It’s frustrating.” Soon after, another credit card bill arrived from another company with a new interest rate of 27.4%—up from 8.9%. This was yet another unpleasant surprise for Courtney who said, “In all the years that I held this card, I never made a late payment.”
This clause protects the card issuer from lawsuits and class action suits. If you have any problem or dispute regarding your account, you’re limited to a binding arbitration hearing. The arbitrator is generally hand-picked and hired by the bank, and your legal options are normally severely limited.
According to Paul Bland, an attorney with Public Justice, a public-interest law firm, once an arbitrator has made a decision, it’s next to impossible to get a court to overturn the decision.
“Few consumers read and understand all of the terms and conditions of the credit cards that they use,” Bland explains. “Therefore, not enough consumers know about binding arbitration to produce a public outcry.”
Unfortunately, cards without mandatory arbitration clauses are getting harder to come by. Some organizations, such as Union Privilege and AARP, have enough muscle to insist that the mandatory arbitration clause not be applied to cards issued with their name. (The same banks typically include the clause in other cards they distribute.) Additionally, credit unions and smaller banks are usually more consumer-friendly than the big card issuers and generally don’t include such clauses.
We apply payments and credits to balances with low introductory/special APRs (such as special balance transfer and purchase APRs) prior to balances with standard APRs. Therefore, your savings will be reduced by making additional transactions or having balances that are subject to standard APRs.
This is certainly quintessentially confusing credit card jargon! It means that any payment you send in will be applied to the balance with the lowest interest rate. In other words, if you have more than one interest rate being applied to the balance on your account, the company charges the highest interest rate for as long as it can. I sincerely hope this practice will be outlawed, and payments will have to be credited against the balance with the highest rate.
But as of now, lenders are free to credit payments against our lowest rate debt.
This can really burn you if you’re taking advantage of a low-rate balance transfer offer and are also charging new purchases to the same card. This is a violation of cardinal rule #1 when it comes to the smart use of balance transfers.
• The Introductory APR does not apply to bank and ATM cash advances.
A very high APR of 20% to 30% is typical for cash advances. To maximize profit from your credit cards, never use those pricey cash advances. Keep away from the ATM at all costs.
Many other phrases included in the terms and conditions can be confusing. Consult the Glossary if you need help understanding any credit terms. Although spending time analyzing credit card terms is no fun, it’s definitely time well spent because it can save you much stress and money down the road.
And who among us wants more stress and less money, especially when the goal is to get more money and perks from our cards?