March 17, 2009
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News: Tending to the Credit Card Fine Print.
We've just completed a series on reaping the best credit card rewards ("Choosing the best Credit Card Rewards"). Certainly, the tough part to chew was tending to the fine print. But in all to many cases with credit card contracts, the reality exposes itself after it's too late. So, while we're at it (perusing the fine print for credit card ‘Rewards Bonuses'), we may as well note any ‘sticky bombs' we find along the way.
It's always been said that "He who writes the contract controls the deal". Even though Congress may be attempting to temper this a little, it will still be around awhile. But, with a little familiarity of the common techniques (and traps), most of the good deals and ‘gotcha's in credit card contracts are pretty easy to spot. So the following guidelines are intended to simplify the fine print in credit card contracts by illustrating the important major mechanisms of concern:
Rewards: This isn't necessarily the most pressing area to cover but, as it does follow my series on credit card rewards programs which requires ‘Tenting to the fine print', it seems fitting to cover it first. They're usually constructed in the form of:
1) Fixed Sums:
o One-time: Say, $25 all at once after your first credit card purchase (for anything).
o Increments: Say, $10 for each month you make a purchase for the first 6 months.
2) Fixed Rate: One simple rate that fits all (like 1% forever for all categories).
3) Stepped rate: Rewards percentage set by charge amount per year category. Say 2% ($1 – 1,500); 3% ($1,500 – 3,000); 4% ($3,000 – 4,500); 5% ($4,500 – 6,000); 1% (above $6,000).
4) Shopping Category: Rewards percentage set by shopping category. Say 5% (gas and groceries); 3% (medical and energy conservation); 1% (all else).
5) Affiliate Partners: These are the deeper discounts for the more expensive stuff. Rewards points count as effective discounts off retail prices.
o Airlines
o Travel
o Gifts
o Entertaining and Dining.For further tips on ‘Fine Print' guidelines, please check the associated series entitled: "Guidelines to the CC Fine Print".