What You Should Look for in Your Credit Card Fine Print
Christy Bieber, The Motley Fool
Updated
While credit card promotional offers seem attractive, it’s important to read the fine print. Here’s what you need to look for.
Woman looking at credit card in dismay.
Image source: Getty Images.
Credit card offers typically highlight everything great about the card such as the rewards program and the consumer protection features or travel perks. But when you’re evaluating whether a card is right for you -- or trying to understand the details of the cards currently in your wallet -- it’s important to look past the marketing material and read the fine print details.
The credit card fine print is where you’ll find information about rates, fees, and potential penalties you may incur while using the card. The details in this fine print can impact the total costs of using your card so make sure give you give them a close read. Some of the key things that you should look for include:
The standard APR
The balance transfer APR and balance transfer fees
The cash advance APR and cash advance fees
The penalty APR
Annual fees
Foreign transaction fees
The expiration date for rewards or points
Where to find your credit card’s fine print
First things first: you need to know where to find your card’s fine print so you can look for all of these key terms we’ll tell you about.
Once you’re approved for a credit card, you’ll be sent your card’s Cardmember Agreement in the mail along with your card. And, if any of the terms and conditions of your card are updated, you’ll be sent another copy with the updated details. This cardmember agreement can sometimes be rather long, but it’s typically divided into sections including a pricing schedule, a section on fees, as well as details on making payments.
Of course, you probably don’t want to wait until you actually have a credit card to find out what its terms are. The good news is, you don’t have to. Credit card marketing pages typically contain a link to the cardmember agreement. Typically, the card’s online marketing page will put this link under the label “Pricing and Terms,” or “Terms and Conditions.” You could also do a google search for the card’s name along with these phrases to find the cardmember agreement online.
The “Pricing and Terms,” or “Terms and Conditions,” will look different from one card to the next. Here’s an example of what the first page of an online “Pricing and Terms” might look like once you’ve clicked the link.
Credit card fine print charge.
This is just the first of five pages of this particular cardmember agreement, so be sure to read through the entire Terms and Conditions page to find out all of the details you need to know.
And, read on in our guide so you’ll understand the lingo used and the things to look for as you peruse the cardmember agreement.
The standard APR
Many credit cards provide a special promotional 0% APR when you first open your account. But this APR doesn’t last forever. It’s important to find out what the standard APR is because this rate can be pretty high on most cards. The standard APR is typically variable on credit cards, which also means that it can adjust upwards or downwards -- so the amount of interest you’ll have to pay could change over time.
Of course, you should ideally avoid carrying a balance on your card, as paying any credit card interest can quickly become expensive. But if you’re enticed by one of those 0% offers and plan to carry a balance for a while, knowing when the standard APR returns is essential.
The balance transfer APR and balance transfer fees
Balance transfers allow you to transfer higher interest credit card debt to a card at a lower rate. Balance transfer cards typically provide a 0% promotional rate but, like the 0% promotional APR for purchases, that rate expires and can jump up significantly.
Again, you’ll want to look at the fine print in your credit card agreement to find out when that 0% rate expires and what the standard rate will be once it does. There’s something else to look for with the balance transfer too, though: the fees the card charges you to move your money over. It’s common for cards to charge a fee of around 3% to transfer a balance, and most cards have a minimum fee too.
You can find cards that don’t charge this fee, so if you’re thinking of transferring a balance, make sure you look carefully at the fine print to see what you could end up paying to do so.
The cash advance APR and cash advance fees
Most credit cards allow you to take a cash advance, which means you get cash money from your card. Unfortunately, you can expect to pay a higher APR for a cash advance with almost all cards, and you’ll incur fees on top of that. Be sure to read the fine print to find out what counts as a cash advance and how you’ll be charged if you take one.
The penalty APR
Missing a payment, exceeding your credit limit, or otherwise violating your cardholder agreement could send your credit card APR skyrocketing if your card issuer imposes a penalty APR.
The fine print in your credit card agreement will tell you the circumstances under which a penalty APR is triggered, as well as what penalty rate you’ll pay if you make a mistake. Since you want to avoid paying extra interest, you’ll need to avoid violating your agreement with your card issuer.
Annual fees
While there are plenty of credit cards without an annual fee out there, some credit cards charge annual fees. The fine print will disclose whether there’s a fee and what the total cost is.
Many cards waive the fee for the first year, but you’ll still be stuck paying in subsequent years if your card charges. If your card is one that charges a fee, make sure the cardholder perks are actually worth paying for before you sign up.
Fees for authorized users or additional cards
Another fee that could be hidden in the fine print of your card agreement is a fee for additional cards or a fee for authorized users.
While some card issuers will allow you to have multiple cards for other household members or for employees, others charge a hefty fee for each additional card user listed on the account. If you plan on letting others share your account, be sure you know what -- if anything -- this will cost you.
Foreign transaction fees
Foreign transaction fees are also common on credit cards and typically are around 3% of the transaction amount. Read your card’s fine print to find out if you’ll pay when using your card outside of the U.S.
Many cards with foreign transaction fees also charge if a payment goes through in a foreign currency, even if you shop within the United States. So if you’re going to order items from companies based elsewhere, you could end up being hit with this fee -- and you need to be prepared.
The expiration date for rewards or points
If your card is a rewards credit card and provides miles or points, check your fine print to see when and if these rewards expire. That way you can be sure to use the rewards you’ve earned before it’s too late -- or can opt for a different card with no expiration dates so you don’t have to worry about rushing to use points or miles.
Read the fine print carefully
As you can see, a lot of important information is found in the fine print of your credit card agreement. Be sure to read it very carefully so you don’t end up incurring unexpected costs and fees that could have easily been avoided.
By reading the fine print you can decide if a card is right for you, or can change the way you use an existing card to make sure you don’t end up paying more than you need to. No one likes wasting money, and a little bit of diligence means you won’t have to.
The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule. If we wouldn’t recommend an offer to a close family member, we wouldn’t recommend it on The Ascent either. Our number one goal is helping people find the best offers to improve their finances. That is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
