Articles About Getting Clean Credit

Credit Card Rates and Fees Often Confusing to Customers

Pittsburgh, PA (PRWEB) November 9, 2006 -- You know the tiny print on the back of your credit card applications and statements contains incredibly important information, but you may not always have a magnifying glass and the time to read it. Well, take comfort — you're not alone.

A recent study released by the Government Accounting Office (GAO) found many credit card holders didn't understand basic facts about their cards. Reading the fine print, or obtaining qualified credit counseling, could have helped them avoid late fees or actions that raised their interest rates.

Although credit card issuers reported only 35% of their active U.S. accounts were assessed late fees in 2005, ever-increasing fees and penalties have become a huge financial burden for many Americans, forcing more and more to seek out an adequate debt management program, or worse, bankruptcy. In some cases, late payment penalties have climbed as high as $39 per occurrence and interest rates for card holders who pay late or exceed their credit limit have increased over 30%.

"It is imperative for consumers to be informed when it comes to understanding the terms of their credit cards," says Caryn Bilotta, Manager of Education Services for Advantage Credit Counseling Service, Inc. "Consumers should always read the fine print of their credit card agreements so they know upfront what fees and penalties their creditors can impose."

According to the GAO, although credit card issuers are required to disclose this important information, they are in no hurry to present it in an easy to understand format. Often, the information is written well above the eighth-grade level (at which about half of U.S. adults read) and, most damaging for consumers, is the fact that the important details regarding late fees, penalties and interest rate changes are frequently buried in small print.

So, what's the solution? The GAO is recommending that the Federal Reserve revise its policies for credit card disclosure materials, requiring the information that significantly affects consumer payments is clearly emphasized.

Advantage Credit Counseling recommends that, in addition to seeking out qualified credit counseling, consumers looking to open a credit card account should ask some key questions:
    -What will the APR increase to after the introductory period is over?
    -Is there an annual fee, and if so, how much is it?
    -How long is the grace period?
    -How are finance charges calculated?
    -What fees and penalty interest rates will you be assessed if you are delinquent on your account?
    Is the APR a fixed or variable rate?
    Is there a default clause where the cardholder can increase your interest rate if you are late on another card or bill?
    Do the card issuers offer a debt management program the cardholder can enroll in should he or she run afoul of the fine print?

Remember, while many credit card offers can be attractive, don't sign on the dotted line without reading the fine print and obtaining qualified credit counseling.

About Advantage Credit Counseling Service, Inc.
Since 1968, Advantage Credit Counseling Service, Inc. (ACCS) has been educating and counseling consumers about budgeting, personal financial management and the responsible use of credit. ACCS's services help to financially empower individuals, bettering their lives; increasing family stability; improving workplace performance; and ultimately benefiting the entire community. ACCS has nine locations in Western and Central Pennsylvania, and offers financial education workshops, credit counseling, housing counseling, and bankruptcy counseling in numerous other states. For more information on additional services, class schedules, and States serviced please visit www.advantageccs.org or call 1-866-699-2227.

Advantage Credit Counseling Service, Inc. is an accredited member of the NFCC and AICCCA; and member in good standing of the Better Business Bureau.

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