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Like most Americans, you probably don’t thoroughly read through the credit card terms and conditions when you open a credit card account or when you receive updates regarding the terms in the mail. However, you’re doing yourself a serious disservice by ignoring them.

Often, these “updates” to your credit card’s terms indicate ways your card issuer can charge you more money. In other words, if you aren’t aware of these changes, you could unknowingly rack up additional fees, or even damage your credit.

credit card billsLook out for these common ploys:

1. Your Due Date Changes

Your credit card company can change your due date at its discretion, as long as your are notified in advance. But if you don’t read the notification, you might not realize the change. Missing a payment by even just one day can cause you to incur heavy late fees, and could increase your interest rate or void a promotional APR.

If you do notice a change and your bill is paid automatically through your online banking service, make sure to update the “pay by” section on your account to reflect the new due date.

2. Your Interest Rate Increases

Credit card companies can adjust your interest rate at their discretion, and in some instances, the interest rate can go as high as 30%. If you read about an upcoming rate hike that is significant, consider carefully before canceling the card. If you take this route, your minimum monthly credit card payment could increase. Plus, closing a credit card could hurt your credit score, especially if it’s one with a high spending limit.

Paperless Bills3. Fees Increase

Expect most of your banking and credit card fees to increase – if they haven’t already – as banks struggle to maintain profits in light of the CARD Act. Fees subject to increase include annual fees, cash advance fees, late fees, paper statement fees, and replacement card fees. Though you may assume that fee hikes would be minimal, this isn’t necessarily the case.

What You Can Do

If you notice an upcoming rate hike but can’t pay off your balance in full, consider transferring the balance to one of the low APR credit cards with a more attractive rates. If your credit is decent, you should be eligible for one with an introductory 0% APR for anywhere between 6 and 21 months.

Just be sure to fully review the terms of the agreement: Understand what the APR will adjust to once the promotional period ends, and how much the balance transfer fee is. Alternatively, and after careful consideration, you could close the account before the rate increase takes effect and continue to pay off your balance at the original interest rate.

To avoid paying excessive fees, make on-time payments a priority and switch to paperless billing. If an issuer tries to slap an annual fee on you, call customer service to see if you can get it waived – it never hurts to ask. Credit card issuers are now banned from charging an over-the-limit fee, unless you provide your written consent. In other words, thoroughly review all documents before you sign. And don’t sign anything you don’t feel good about.

credit card thoughtsFinal Thoughts

One way to minimize the effect of rate hikes and fee increases is to simply commit to getting and staying out of credit card debt. All it takes is a little sacrifice, some common sense, and a careful reassessment of your spending habits.

The three golden rules to eliminate credit card debt are to spend less than you make, to create and stick to a budget, and to eliminate unnecessary purchases. Let the banks fend for themselves when it comes to staying profitable. You’ve got better things to do with your money!

Have you had an interest rate hike in the past? What did you do about it?

Author Bio: David Bakke discusses smart money management and responsible credit card use on Money Crashers Personal Finance. Additionally, he enjoys playing with his young son, eating good food, and reselling electronics online.

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!

4 Responses to “3 Reasons to Read the Terms & Conditions on Your Credit Card”

  1. Oren says:

    I never read the terms and conditions but I make sure I am always able to pay off my cards in full every month.

  2. Nunzio Bruno says:

    You nailed it with this post! It’s crucial to open those envelopes that come in the mail. You are definitely charged for the things you don’e know – and it can be expensive. Your wrap up was great too but sometimes those three easy things to do better for yourself are the toughest to beat behaviorally. In some of us it comes down to a real culture shift depending how you were brought up around money.

  3. Honestly, I didn’t know that they could change some of those things around willy nilly whenever they wanted! Not cool, not cool. Luckily, we don’t maintain a monthly balance, so that’s good!

  4. Jacob Loveney says:

    Credit card issuers often include details about credit card changes on your credit card billing statement or on an insert in the same envelope with your statement. If the change is listed on your billing statement, you’ll have to read the whole document to find it. Otherwise, you might miss a chance to reject the changes.

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