Beware of Hidden Terms on Credit Card Contracts

By: Melissa Kellett

Obtaining a credit?card is always very tempting. Those advertisements on television, newspapers, magazines and on the internet tell us about all the benefits we can obtain by owning those pieces of plastic currency. However, one should be careful enough to read the Credit Card contract thoroughly as there are many stipulations written in the fine print that may affect your finances.

In order to attract customers, credit card companies offer different benefits attached to credit card original services. There are promotional interest rates, no fees for certain transactions, additional benefits like cash back or rewards, etc. But you need to beware of certain conditions which apply to most of these offers that may turn them into non advantageous stipulations.

Cash Back Credit Cards

A good example of this practice are cash back credit cards. These cards offer to reimburse a percentage of the money you spend on certain services and goods. What's the catch? It's simple: The stores that adhere to these programs charge significantly higher prices than other stores. And the program, as stated in the contract, only works when you purchase at those stores. Thus, though you may think that you are getting money back by purchasing there, you are actually overpaying for the products or services you purchase.

Reward Programs

There are an infinite variety of reward programs attached to credit cards. You can obtain miles that you can exchange for flight tickets, points you can exchange for products, cinema or theater tickets, discounts on goods and services, etc. However, in many cases you have only a limited time to use those points or miles so you actually never get to acquire the amount of miles or points needed to obtain an important reward.

0% APR Promotional Period

This is one of the most appealing offers that credit cards feature in order to attract customers. The idea is that for a certain period of time, you are not charged interests for financing the credit card balance. It's just like getting a loan for free, till the promotional period is over, you are not charged for the money you owe the credit card issuer.

The stipulations that turn this clause useless in some cases are diverse. For example, there are some credit cards that only offer you a 0% promotional period if you spend an important amount of money on goods and services with your credit card on a monthly basis. There are others that only offer 0% APR financing on the part of the balance that corresponds to new purchases and not to transferred balances.

No Fees, No Costs

No fee promotions are also tricky and have to be analyzed carefully as they may not imply what it seems. No fees for balance transfers may only apply up to certain amount of money or you may not combine it with a 0% APR promotional period. Moreover there are also some cases in which you need to spend certain amount in order for the fee to be waived. As you can see, nothing comes at no cost, thus, it is wise to read the credit card contract in detail before signing so as to see what you are really getting into.

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