The Fine Print: Deal With It!

Just recently American’s consumer debt—that’s everything except mortgages—hit $3.789 trillion.

So what’s a trillion? It’s a million million; a thousand billion or 1,000,000,000,000. A billion is a thousand million. Or 1,000,000,000.

young woman with a shocked expression examining a document with a magnifying glass

A billion seconds ago it was 1986 and Ronald Reagan and Mikhail Gorbachev opened talks at a summit in Reykjavik, Iceland. A billion minutes ago it was the year 117 A.D. A billion hours ago our ancestors were living in the Stone Age.

But a billion dollars ago in consumer debt was something like just two weeks ago!

Learning how to manage your debt starts with understanding what’s in the fine print.

The principle of fine print. Never trust the flashy print, the cool logos or the enticing promises. There’s always a catch in the fine print. Remember this: What the big print giveth, the fine print taketh away!

Changing the rules. When you signed by your signature you gave the company the right to change the terms at any time. They can raise rates, shorten grace periods and basically change the rules and terms to their advantage whenever they feel like it. But they must tell you in writing.

Filler material. This is where they’re most likely to tell you about changes. But you think it’s just filler material and nuisance ads. Start paying attention. Read everything.

APR. This is the annual percentage rate (interest) you will pay on an outstanding balance. For credit cards, it’s almost always variable, which means it can change without notice. Your APR may be “fixed” but don’t let that fool you. Just because it’s not tied to an index doesn’t mean it will not change. All the company has to do is notify you that your fixed rate has been increased.

Late fee: Miss your due date and you’ll get socked with a big fat late fee, as stated in the fine print. Typically it’s $29, but some have increased that to $39 or more. Companies by law are allowed to set 5pm on the due date in that creditor’s time zone as the cut-off time for which that payment is due. This can be a huge trick because if your payment arrives after 2pm in say the Pacific time zone (even if you sent it by overnight mail), you’re late!

Slip up, pay dearly. If you miss a payment or are late twice, expect your rate to increase automatically and not just a little bit. It could go to the maximum allowed in your state.

Over-limit fee. Let’s say you’re close to your limit, you’re payment is five minutes late, so the late fee puts you over your credit limit. Well, hang on because you’re going to get hit with another fine of $29 or more. And if your payment next month doesn’t bring the balance below limit, it’s going to happen again.

Transaction fees. If you use your card to get cash, to buy gift cards, to pay the rent or utilities, specific fees could apply. Make sure you know what the fine print says.

Arbitration: Some card companies note in the fine print that if there’s a dispute you agree to go to arbitration. That means if you have a complaint with the company you’ll have to pay for arbitration. You might as well stick a sign on your back that says, “Kick Me!”

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