When you receive the card, be sure to read your cardholder agreement (the fine print). You will want to pay special attention to the assigned rate, terms and conditions before you activate the card. If you find that the conditions are different than the ones you originally applied for, immediately cancel the card and ask that the account be closed by consumer request.
Credit Card schemes…er…promotions
It’s hard to stay ahead of their latest promotions (or schemes, depending on your point of view). Let’s look at what’s new with credit cards.
Change in terms scenario 1
A consumer signs up for 0 percent for one year, followed by nine percent fixed interest going forward. A careful reading of the cardholder agreement identifies that the card company can change the terms of the agreement unless the new terms are refused. Therefore, after the promotional 0 percent expires, a notice may be sent saying the nine percent fixed rate is now variable and currently stands at 18 percent. If these terms are not refused, the new rate is 18 percent. Consumers have the option to notify the card issuer within 30 days that the new terms are not acceptable. In that event, the nine percent rate is maintained until the card is paid in full. At that point, the card can no longer be used by you, as it is closed.
The moral of the story: In the end, you really have no choice on whether or not to accept the new terms if you want to keep the card.
Change in terms scenario 2
So, why did the card company change the terms in the first place? The cardholder agreement spells it out. Perhaps the consumer paid late to this or another creditor (yes, that can sometimes be used against you). Or, the card issuer determines the consumer now has too much total debt. The wording of the agreement leaves a huge loophole on changing the terms of the agreement.
The moral of the story: Pay all creditors on time and realize card issuers are watching your overall report, not just your history with them.
