When signing up for a new credit card, you probably pay attention to the interest rate and maybe the balance transfer fee. You might even check to see what the late fee is. Congratulations on taking those steps to protect yourself.
But you’re still not doing enough.
Credit card gotcha No. 1: Hidden policies
I recently had an issue with my bank — a national bank with offices across the globe whose name you’d know. This may even be your bank.
I was a few days late paying a credit card bill and was ready to accept the penalty. I knew I would owe a fee and interest and was prepared to pay without complaint. I also had not been late on a payment before then. But my bank cut off my credit card. I found out when a merchant denied the card — one I’ve been using for more than three years.
My first thought was: What will this to do my credit score? I work hard to keep it at around 800.
I talked with three bank employees before I found someone to explain why my card had been declined. But even then, it wasn’t much of an explanation. I was told: “We don’t tell customers about denials when there’s a late payment.”
What? Yes, I was late, but suddenly I had lost my rights as a consumer?
The customer service rep said, “It’s in the Terms & Conditions.” I asked her to show me where, and she couldn’t find it. Nor could I. The warning wasn’t on my statement, wasn’t in the card issuer’s Terms & Conditions … it seemed to be a policy that was made up on the fly.
It was maddening.
That provision — that a credit card may be cut off after missing one payment — isn’t in the fine print. It’s not in the big print, either.
Lesson: Not everything is covered in the fine print. Banks always have the upper hand.
Advice: Take 15 minutes to get to know your new credit card, or even one you have had in your wallet for years. Read all of the fine print. Then, call the bank and find out under what conditions they would deny your use of the card. Better to know ahead of time than at the moment you’re trying to buy something.
Credit card gotcha No. 2: Opting out is a huge pain
After learning about these hidden policies, I was on a roll. Because privacy is such a big concern, I decided to opt out of allowing my bank to share my information. You have to do the work to not allow banks to share your information — to opt out. Opting in is the default.
You can find information on your rights to opt out at the Federal Trade Commission (FTC) website. Mercifully, that information is easy to read.
It took me 20 minutes on my bank’s website just to find the policy for sharing information, and I ultimately didn’t even find it there. Typing “opt out” in the search function doesn’t get you anywhere. But opting out is the only way to limit what a bank or credit card company does with your personal information.
Having no luck on my bank’s website, I eventually made my way to my credit card statement and found this … on the third or fourth page, well past what most of us usually look at when paying our monthly bill. It’s a very brief excerpt from a much, much longer piece of text:
The words “you” and “your” apply to each person who submits the application. You have read the accompanying application, and you affirm that everything you have stated is true and complete … You consent to our sharing of information about you and your account with the organization, if any, endorsing this credit card program. You authorize us to share with others, to the extent permitted by law, such information and our credit experience with you. In addition, you may as a customer later indicate a preference to exempt your account from some of the information-sharing with other companies (“opt-out”). If you accept or use an account, you do so subject to the terms of this application, the “Details of Rate, Fee and Other Cost Information” and the Credit Card Agreement, as it may be amended; you also agree to pay and/or to be held jointly and severally liable for all charges incurred under such terms … You further consent to our use of automatic dialers, text, or prerecorded messages for servicing your account even if the telephone number is a mobile telephone number for which the called party is charged …
That’s written at the same level as academic articles. It’s not designed to be read and understood by the general public.
And can you believe everything you’re “agreeing” to here?
Once I finally found the right information, I still wasn’t finished. I had to call or write the bank to opt out. Again, they don’t make it easy.
The bottom line
Credit cards are a necessity in today’s world, but so is being smart about how you use them and taking the time to know as much as you can about their terms and conditions. It also can’t hurt to occasionally read all of the fine print, however painful that might be.
(Article written by Kiplinger)