|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Average Daily Balance |
Average Daily Balance |
|
|
Monthly rate |
1 1/2% |
1 1/2% |
|
APR |
18% |
18% |
|
Previous Balance |
$400 |
$400 |
|
New Purchases |
$50 on 18th day |
$50 on 18th day |
|
Payments |
$300 on 15th day |
$300 on 15th day |
|
|
(new balance = $100) |
(new balance = $100) |
|
Average Daily Balance |
$270 * |
$250 ** |
|
Finance Charge |
$4.05 (1 1/2% x $270) |
$3.75 (1 1/2% x $250) |
|
||
|
|
Adjusted Balance |
Previous Balance |
|
Monthly rate |
1 1/2% |
1 1/2% |
|
APR |
18% |
18% |
|
Previous Balance |
$400 |
$400 |
|
Payments |
$300 |
$300 |
|
Average Daily Balance |
N/A |
N/A |
|
Finance Charge |
$1.50 (1 1/2% x $100) |
$6.00 (1 1/2% x $400) |
Up 9. Back Number of days in the cycle
Be careful here, not all cycles are 30 days! Most companies use a 26, 28, or 30 day cycle!
CAUTION! Credit card companies using less than 30 days charge interest 13 or 14 times a year instead of just 12!
365 ÷ 30 = 12 billing cycles
365 ÷ 28 = 13 billing cycles
365 ÷ 26 = 14 billing cycles
Back Previous balance of cash advances
Cash advance balances are charged at higher interest rates than purchase balances and any cash advance fees are added to your account before charging you interest so your balance is higher when they apply the interest charge!
Also, you are really paying twice here - the advance fee and then the interest charged on the fee. Although only about $.60 it's important to know and they can add up!
Back Subtracting any payments excluding any unpaid FINANCE CHARGES
This is another way of saying, "we add unpaid interest charges, interest charges on previous billed balances, and any applicable fees to your account before we credit your payment". In other words, they increase your balance with these interest charges and fees first then subtract your payment!
For example, if you had made a $55 minimum payment but the check bounced and, at the same time, you charged $100 over your credit limit then the following three (3) charges would apply:
- Returned check fees = $25 (and probably another $25 fee from your bank too!)
- Over the limit fee (usually $15 or a % of the total)
- Late payment fee (usually $10)
Since these fees are automatically added to your credit card account and your payment is applied to these fees first, you can see how only $5 out of your $55 payment goes toward the balance!
Up 10. Purchases:
TEXT: The FINANCE CHARGES for a billing cycle are computed by applying the monthly periodic rate shown on my periodic statement to the average daily balance of credit purchases which is determined by dividing the sum of the daily balances during the billing cycle by the number of days in the cycle. Each daily balance is determined by adding to the previous balance of credit purchases any new credit purchases posted to my Account as of the transaction date or the first day of the billing cycle in which posted, which-ever is later, and subtracting any payments as received and credit as posted to my Account, but excluding any unpaid FINANCE CHARGES.
See previous Cash Advances explanation since everything is identical except the interest rate on purchases is usually lower.
As stated earlier, one finance rate is applied to purchases, another to cash advances, and then both are added together to get your total finance charges for the billing period.
Up 11. GRACE PERIOD: Back to Late Charges
TEXT: There is no grace period for cash advances. The grace period for the new balance of credit purchases extends to the payment due date shown on my periodic statement.
Key Points/Concerns:
The statement, "no grace period for cash advances" means that you will be charged interest from the first day you take the cash until the day you pay it off!
Many people mistakenly believe they are not charged interest if they pay off the cash advance by the due date on the bill . . . not true!
For instance, by taking a cash advance on the first day of a 30-day billing cycle, you have already accrued 30 days of interest by the time your bill arrives! Cash Advances are Loans and are always charged at higher rates!
Finally, late payment fees apply as well so expect to be charged $15 or more per late payment!
The statement, "grace period for the new balance of credit purchases extends to the payment due date" means you will not be charged interest on purchases if they receive "payment if full" by the due date.
Grace periods are great but they can lull people into believing they have a false sense of "extra time" to pay the bill, without accruing interest . . . don't believe it!
Finally, miss one or more due dates and you will not only be charged a late fee, your interest rate will double . . even triple!
Bottom line If you need cash advances, try to take them as close to the end of the billing cycle as possible and then pay them off as soon as possible . . . timing is everything!
Also, be sure you know what the "Grace Period" applies to! It almost never applies to cash advances.
Up 12. MINIMUM PAYMENT:Back to Late Charges
TEXT: Every month, I must pay at least the minimum payment due by the payment due date shown on my periodic statement. By separate agreement, I may authorize you to transfer the minimum payment due automatically from my checking account, Credit Union share or share draft account, or other similar accounts. I may, of course, pay more frequently, pay more or pay the new balance in full, and I will reduce my periodic FINANCE CHARGE by doing so. The minimum payment due will be either: (a) 3% of my new balance, or $10.00, whichever is greater; or (b) my new balance, if it is less than $10.00.
TEXT: In addition, I must pay any amount on my periodic statement listed as past due and any late charge. Lastly, at any time my new balance exceeds my credit limit, I must pay the excess as well as any over-limit charge.
Key Points/Concerns:
There is a great deal important information buried in these two paragraphs!
The statement, "pay at least the minimum payment due" is not as innocent as it sounds. You must combine this statement with the "in addition" paragraph to learn that your actual minimum payment includes past due amounts, late charges, any amount over your credit limit and over-limit charges!
This requires closer examination!
Let's say your balance is $1,030 and the minimum payment is 2% of the balance ($20)
And suppose your payment was late so you are assessed a $15 late fee.
Then, suppose your credit limit is a $1000 but you are $30 over that limit so you are assessed an "over the limit" fee of $10.
Add all this up and your minimum payment is not $20 it is actually $45!
($20 + $15 late fee + $10 limit fee)When people send in a minimum payment of $20 instead of $45 their next month's statement will show an even higher balance because the $20 didn't even cover the fees!
Also, the account is still be past due and still over the credit limit so the same late fees and over the limit fees will are assessed again next month starting a vicious cycle that is impossible to escape making minimum payments!
Bottom Line: Pay close attention to what the minimum payment really includes.
Pay off the balance but if that is not possible, then try to make a payment that covers all fees, interest charges, and at least some of the balance.
Finally, always pay on time and stay below your credit limit!
Up 13. What Gets Paid First
TEXT: I understand and agree that any payment made by me will be applied in the following order: (1) late charges, if any; (2) unpaid periodic FINANCE CHARGE due on both cash advances and purchases; (3) fees; (4) outstanding principal balances of cash advances and purchases previously billed; and (5) current cash advances and purchases. If two or more transactions are posted on the same day, my payment will be applied as above.
Key Points/Concerns:
The statement, "applied in the following order" becomes extremely important if you've ever fallen behind in payments, made late payments, bounced a check or carried a balance!
Consider the following example with a $5,030 balance and a $100 minimum payment:
|
Category Applied To |
$100 Payment |
What's Left |
|
late charges |
$15 |
$85 |
|
unpaid finance charge |
$28 |
$57 |
|
fees; (ex: over limit fee, returned checks etc.) |
$10 |
$47 |
|
outstanding balances previously billed (ex: $1,000) |
$47 |
$0.0 |
|
current cash advances and purchases. |
$0.0 |
N/A |
As you can see, a $100 payment didn't even touch the cash advance and purchase balance; no wonder it takes the average American 12.6 years to pay off their credit card debt!
Bottom line Try to avoid costly fees, especially late fees which carry a heavy penalty.
Up 14. CREDIT LIMIT:
TEXT: The bank will establish a credit limit for me which is disclosed separately. I agree not to let the unpaid balance exceed this credit limit. I agree to advise you of any change in my financial condition which may affect my creditworthiness. I also agree that I shall update the credit information that I have provided you, from time to time, on your demand. I may request an increase in writing of my credit limit, but credit limit increases must be approved by you.
Key Points/Concerns:
The statement, "advise you of any change in my financial condition which may affect my creditworthiness" requires that you inform them immediately if you lose your job or other source of income. Whether or not you tell them, they can:
- Demand payment if full
- Raise your interest rates
- Suspend your account
- Demand that you return their credit cards
Credit Card companies are usually willing to work with customers experiencing temporary financial difficulty if they know about it by lowering or suspending payments On the other hand, finding out about problems after three months of late payments causes them to lose confidence in you and makes them much less willing to work with you.
Also, notice that over limit charges are addressed elsewhere in the disclosure statement.
Bottom line Know what the over-limit charge is and try not to exceed it. If you need a higher credit limit ask beforehand to avoid the charge. Always keep the company informed of your status to avoid trouble.
Up 15. ANNUAL FEE:
TEXT: You will assess an annual fee of $10.00 for each year the Account is open, whether or not I use the Account and regardless of the number of Cards issued on the Account. The month and year in which the Card expires are printed on the Card. That same month each year is the anniversary for the Account. My first annual fee will be posted to the Account on the first periodic statement following the month the Account is opened. I will be billed subsequently for the full annual fee of $10.00 on the first periodic statement after my anniversary in each succeeding year.
TEXT: I understand that I shall receive an annual fee notice on the same periodic statement each year on which the annual fee is assessed. I can avoid such annual fee if I terminate my Account by written request within thirty (30) days of such annual fee notice. I may use the Card until I tell you to close the Account within thirty (30) days of such notice. I may close the Account by writing to you at The Hometown Bank, 100 Main Street, P.O. Box 1234, New York, NY 12345-0001, and returning any Card(s) issued on the Account. Otherwise, the annual fee will not be refunded in whole or in part and shall be owed to you by me once it is posted to the Account even if the Account is subsequently changed, suspended, closed or terminated for any reason. Notwithstanding the foregoing, I understand and agree that the annual fee will be waived if my total net purchases meet or exceed $1,000.00 in the twelve (12) month period starting from my last anniversary date previous year.
Key Points/Concerns:
The most important point here is when and how the fee is assessed, and how to avoid it.
You can avoid the fee altogether by meeting the companies minimum purchase threshold ($1,000 in this example but it may be higher or lower for your card)
The threshold applies to purchases not cash advances).
Annual fees usually run from the month after you receive the card to the same month the following year.
Not all companies charge a fee nor waive it and some annual fees can run hundreds of dollars a year!
Bottom line Try to find a card with no annual fee, or one that has a minimum fee. If you cannot qualify for either, find one that will waive the fee based on a minimum purchase threshold!
Up 16. OVER LIMIT CHARGE (Fees)Back to credit limit
TEXT: I will be charged an over-limit fee of $15.00 in each month the Account exceeds the assigned credit limit on the billing cycle closing date.
Key Points/Concerns:
Three important items here:
First, $15 is the average but some companies charge $25 or more.
Second, Remember that your minimum payment is applied to this fee first so a $20 payment would only lower your balance $5.
Third, even if you exceed your credit limit, you can still avoid the fee by sending in a partial payment before the billing cycle closing date. You still have to make a regular payment when the bill comes in but at least you avoided the over-limit fee!
Bottom line Try to avoid exceeding your credit limit, ask for a higher limit beforehand, or pay the amount over the limit prior to the billing cycle closing date.
Up 17. LATE CHARGE:
TEXT: If you have not received my minimum payment due within twenty-five (25) days of the billing cycle closing date, I agree to pay a late charge of $15.00.
Key Points/Concerns:
Remember the minimum payment due includes more than just the % of the outstanding balance.
The "25 days of the billing cycle closing date" does not mean 25 days from the date you received the bill!
For instance, if the billing cycle closes out on the 21st of the month and you receive your bill on the 7th of the following month, half of the 25 days allowed are already lost.
Also, don't confuse this due date with the Grace Period!
Up 18. RETURNED CHECK FEE
TEXT: I will be charged $25.00 per returned item.
Key Points/Concerns:
This is the industry average!
Don't forget that your bank, that handles your checking account, will also charge a returned check fee (usually $25-$29) as well.
If you can prove the credit card company or your bank made a mistake then you can usually have this fee removed.
Finally, your payment goes toward paying this fee first before being applied toward the balance!
Up 19. REPLACEMENT CARD FEE:
TEXT: I will be charged $15.00 for the first replacement Card (does not apply to instances of imprinting errors), $25.00 for the second and $50.00 for the third replacement Card.
Key Points/Concerns:
This fee normally only applies to lost cards not stolen cards but always ask!
Notice losing a card three times over a two year period escalates the cost each time so that it would cost $50 for the third replacement card!
Up 20. DOCUMENT FEE:
TEXT: If a copy of any periodic statement, sales draft or similar document is provided by you at my request, (other than in connection with a billing error inquiry), a statement or document fee in the amount of $1.00 for each page, and $2.00 for each sales draft or any other document, may be imposed by you on the Account.
Key Points/Concerns:
One or two dollars per page seems like a small amount until you need to dispute a bill, return a product, file bankruptcy, or a host of other things . . . these all require proof, sometimes as much as two years worth of documents!
Bottom line You usually cannot do anything about the document fee so try to avoid needing it in the first place by keeping all statements, sales slips, payment records and copies of all correspondence dealing with your credit cards.
Up 21. CREDIT LIFE AND/OR DISABILITY INSURANCE:
TEXT:TEXT: If credit insurance is offered on the Account and I request it, the premium will be calculated monthly by multiplying the premium rate by the outstanding balance on the Account. You will add the premium amount to the Account balance on the billing cycle closing date. The purchase of this insurance is voluntary and is not required for credit approval. I acknowledge receiving a copy of the credit insurance documents which contains current rates and other information.
Key Points/Concerns:
The statement, "insurance is voluntary and is not required for credit approval" means that you cannot be turned down for credit because you refuse to purchase the insurance nor can you be approved based on the purchase of credit insurance.
More importantly, it is almost always better to insure yourself against income loss or death by purchasing regular life or disability insurance instead of credit insurance! More info on credit insurance.
The next statement, "premium will be calculated monthly by multiplying the premium rate by the outstanding balance" means, the higher your balance the more the insurance costs.
The cost of this insurance is automatically added to your account, and is one of the fees that is paid first, before applying your payment to the purchase or cash advance balance.
Bottom line Never buy the credit insurance! Purchase a regular life or disability insurance instead. These policies are cheaper and are better protection for you or your family.
Up 22. PURCHASES AND ADVANCES:
TEXT: I may make purchases and request advances in accordance with then current loan policies up to my credit limit. I understand and agree that all purchases and other transactions requested by me or anyone I have permitted to use the Card(s) and/or Account are subject to your approval.
Key Points/Concerns:
The statement, " in accordance with then current loan policies" leaves you wide open to higher rates!
Although low rates may apply when you first take the card but six months later higher rates may be applied without you realizing it!
There are a couple reasons why this might happen.
You defaulted on the account!
They sent a renewal card or notice with a new disclosure statement that included the higher rate but you somehow overlooked it.
Bottom line: The term loan applies to both purchases and cash advances. Always read the complete disclosure statement and pay close attention to the interest rates for purchases and cash advances especially after six months!
Also, the statement, "anyone I have permitted to use the Card" means you are liable for all charges. Be careful who you allow to use your cards and or access your accounts! See Use of Card
Up 23. USING THE CARD:
TEXT:To make a purchase or obtain an advance, there are two alternative procedures to be followed. One is for me to present the Card or Card number to a participating VISA plan merchant, to you or to another financial institution, and sign or authorize a sales or cash advance draft. The other is to complete the transaction by using my Personal Identification Number (PIN) in conjunction with the Card in an Automated Teller Machine or other type of electronic terminal that provides access to the VISA system.
Key Points/Concerns:
Be sure to:
- Keep all sales receipts;
- Do not let the sales clerk keep the carbon
- Safeguard your PIN.
Up 24. :ELECTRONIC FUND TRANSFER
TEXT: In the event a use of the Card or the Account number of the Card constitutes an Electronic Fund Transfer, the terms and conditions of my Electronic Fund Transfer Agreement and Disclosure with you shall govern such transactions to the extent the Electronic Fund Transfer Agreement and Disclosure expands or amends this Agreement and Disclosure Statement.
Key Points/Concerns:
This means that all Electronic Fund Transfers are governed by a separate Agreement and Disclosure statement provided by the company and the Electronic Fund Transfer Act. There are basically four kinds of electronic transfers:
- Teller Machines (ATMs).
- Point of Sale Transactions (Debit cards).
- Pre-authorized Transfers. (automatic withdrawal to make regular, ongoing payments of insurance, mortgage, utility or other bills.
- Telephone: (the payment of specific bills by phone or the transfer of funds from one account to another)
Some transactions are not protected if your card is lost or stolen and if you do not tell the card issuer within two business days after learning of the loss or theft, you could be liable for as much as $500 See Lost or Stolen Card
Furthermore, if you do not report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after the 60-day period. That means you could lose all the money in your account plus your maximum overdraft line of credit! More on the EFT Act
Bottom line Report lost or stolen cards ASAP! And only give your account information to people that YOU have called.
Up 25. PREPAYMENT OR IRREGULAR PAYMENTS:
TEXT: Though I need pay only the minimum payment due, I understand that I have the right to repay my account balance at any time without prepayment penalty. I also understand and agree that I will be charged FINANCE CHARGES only to the date I repay my entire loan. I may make larger payments without penalty and this may reduce the total amount of FINANCE CHARGES that I will repay. Any partial payment of my balance will not advance my next payment due date(s). I understand and agree that any payment that (a) delays or (b) accelerates the repayment of my unpaid balance will (a) increase or (b) decrease my monthly periodic FINANCE CHARGE.
Key Points/Concerns:
The statement, "any partial payment of my balance will not advance my next payment due date" includes two important points:
First, if your payment is not due until the 25th but you make a partial payment on the 10th, you are still expected to make a minimum payment on the 25th. If you don't you'll be charged a late fee!
Second, overpaying does not change the due date nor allow you to skip a payment. For instance, if your minimum payment is due on the 25th of July and you send a $100 instead on the minimum $50, you are still expected to make a minimum payment ($50), the next month. (In this case on the 25th of August)
It's good to know that you can pay off your credit card balance early or make larger then minimum payments without penalty, unlike some bank loans where you are assessed a penalty for paying off the note early.
Up 26. DEFAULT:
TEXT: I will be in default if: 1) I do not pay on time or in the proper amount(s); 2) I fail to live up to any of the terms of this Agreement and Disclosure Statement; 3) my creditworthiness is impaired; or 4) I die, become insolvent or am the subject of bankruptcy or receivership proceedings. In the event of any action by you to enforce this Agreement and Disclosure Statement, I agree to pay the costs thereof, reasonable attorneys' fees, and other expenses. I understand and agree that FINANCE CHARGES at the ANNUAL PERCENTAGE RATE as permitted under this Agreement and Disclosure Statement will continue to accrue until I repay my entire loan.
Key Points/Concerns:
Please look very closely at this paragraph because it contains many open-ended statements that leave you wide open to higher interest rates and costly fees!
The statement, "do not pay on time" is obvious but the not so obvious is the statement, "proper amount(s)"! This means that you must send in the minimum payment (1-3% of the balance) plus any past due interest and fees; being just one dollar short can place your account in default!
The word "any" in the statement "fail to live up to any of the terms" means that the credit card company can change your interest rate or charge other fees for breaking even a minor term such as sending in a payment late . . . just 1 day late and you're in default!
The statement, "my creditworthiness is impaired" is open to interpretation by anyone reading your credit report, looking over your credit history, or reviewing your credit card account. Once again, making a late payment or paying less than the minimum payment is cause enough for them to consider your creditworthiness impaired and thus they can raise your interest rate!
The statement, "costs thereof, reasonable attorneys' fees, and other expenses" means that if you do not pay your credit card bill, and they have to hire an attorney or debt collection agency, you foot the bill and, you still have to pay the credit card debt!
The statement, "finance charges . . . continue to accrue until I repay my entire loan" means the company can raise your interest rate (and they usually do) and then finance charges accrue at the highest interest rate!
Bottom lineYou can go into default for breaking even the smallest rules and, when you do, you become vulnerable to higher interest rates and exorbitant fees! Read your statements closely to learn what can cause you to default and how much it can cost you.
Up 27. ACCELERATION AND COLLECTION COSTS:
TEXT: Upon my default, I understand and agree that you have the right to suspend any and all Account and Card privileges temporarily or permanently and/or you may demand immediate payment of the unpaid balance, FINANCE CHARGES, late charges, over-limit fees and collection costs. I understand and agree that I will be subject to FINANCE CHARGES (at the applicable monthly periodic rate), late charges, over-limit fees and collection costs under the terms disclosed in this Agreement and Disclosure Statement, until I repay my entire loan. I also agree to pay your reasonable attorneys' fees, and court costs.
Key Points/Concerns:
Wow! This paragraph is packed with statements that could cost you a great deal of money! Let's examine the key points . . .
The statement, "suspend any and all Account and Card privileges temporarily or permanently" means that you could permanently loose the use of the card even though you still owe a balance, and you will continue to accrue interest charges and fees!
The statement, "demand immediate payment of the unpaid balance including FINANCE CHARGES, late charges, over-limit fees and collection costs" means that any violation of the terms and they can demand immediate payment of the entire balance! Imagine if you owed $12,000 and they suddenly demanded all of it!
It also means that your interest rate will jump to the highest rate allowed plus additional fees (late charges, over-limit fees etc.) are assessed every month that you are in default.
You should also know that once you default, gaining back your previous creditworthiness status is nearly impossible so, expect to pay the higher interest rate for as long as you use the card and/or owe and balance.
The statement, "(at the applicable monthly periodic rate)" means that any violation and your previous low APR jumps to a higher rate!
The statement, "agree to pay your reasonable attorneys' fees, and court costs" means that if, collection becomes necessary, you pay their attorney's fees (usually several hundred dollars) and court costs (usually $75 to $400) plus you still owe the balance which continues to accrue interest at the highest rate and all fees!
Bottom line It's extremely easy to default on your account and the effects are devastating to your credit history not to mention your bank account! Be sure you understand what "default" is and how it happens. Even a late payment puts you in default!
Up 28. PAYMENT RESPONSIBILITY:
TEXT: I agree to repay you according to the terms of this Agreement and Disclosure Statement for all purchases, advances, FINANCE CHARGES, late charges, and over-limit fees, if any, arising from the use of the Account by me or any other person I permit to use the Account, even if that person exceeds my permission. I cannot disclaim responsibility by notifying you, although you will close the Account if I so request and I will return all Cards to you. My obligation to pay the Account balance continues even though an agreement, divorce decree or other court judgment to which you are not a party may direct me or one of the other persons responsible to pay the Account. Any person using the Account and/or Card is jointly and severally responsible with me for charges he or she makes, but if that person signs the Card he or she becomes a party to this Agreement and also is responsible for all charges on the Account, including mine. The Cards remain your property and I must recover and surrender to you all Cards upon your request and/or upon termination of this Account.
Key Points/Concerns:
The statement, "even if that person exceeds my permission I cannot disclaim responsibility by notifying you" means that you will have to pay the bill regardless of who used the card or the circumstances under which they used it. (except stolen cards) Also, calling and telling them about it does not relieve you of the debt!
This statement is specifically written for couples who break up and then one member gets angry and charges up a storm!
The statement, " . . . even though an agreement, divorce decree or other court judgment . . . " means that you are not relieved from paying the debt even though your divorce decree says your ex is supposed to make the payments! A divorce decree is a civil settlement and therefore does not apply to legal credit matters!
The statement, " . . . "jointly and severally responsible with me for charges . . . " allows the company to legally pursue anyone who uses the card even though they did not sign any agreement! However, you are still primarily responsible for the debt. (see next statement)
The statement, "if that person signs the Card he or she becomes a party to this Agreement" means that anyone who signs (not just uses) the card is now equally responsible for paying the bill as opposed to the previous statement where they may be held responsible if you default and cannot pay!
Bottom line Recognize the difference between signing and using the card! Understand that a divorce decree or other court document does not relieve you of your responsibility to pay the debt. And finally, be careful who you allow to use your card.
Up 29. UNAUTHORIZED USE OF the Card:
TEXT: I will not be liable for unauthorized use that occurs after I provide notification by calling (800) 123-4567, or when you receive notice in writing at 100 E. Main St. , P.O. Box 1212, Anywhere USA, 12345-0001, of the loss, theft or possible unauthorized use.
Key Points/Concerns:
The statement, "unauthorized use that occurs after I provide notification" contains the keyword "after" which means you are still liable for up to $50 per card on charges that occur between the time your card is lost or stolen and your phone call to report it. Thieves can do a lot of damage in just a couple of hours, especially if they got a hold of several cards . . . always call first to report lost or stolen cards then, follow up with a letter.
Also, pay close attention to the address that must send the notification letter to. . . it's almost never the same address as the one you send payments too.
Up 30. TERMINATION OF THE AGREEMENT:
TEXT:You may terminate this Agreement and Disclosure Statement upon my default. Either you or I may terminate this Agreement and Disclosure Statement for other good cause. In no event shall any termination relieve me of my obligation to repay sums already borrowed, FINANCE CHARGES, late charges, and over-limit charges, if any. I agree to return all the Cards issued to me or any party designated by me.
Key Points/Concerns:
Pay close attention to the words "terminate" in the statement "terminate this Agreement and Disclosure Statement upon my default" because it means that instead of canceling your account they can replace the "terms and agreement" in the original disclosure statement with new (stricter) ones that always include higher interest rates and higher fees!
Although you can refuse to sign the new terms, your account is in default and therefore, as per the original agreement, they can still raise your rates and fees.
Up 31. LIEN ON SHARES:
TEXT: If I have agreed voluntarily to a lien on shares in my VISA Application, I understand and agree that if I am in default on the Account, you may apply all shares (except IRA accounts) then on deposit needed by you to repay my loan in part or in full.
Key Points/Concerns:
This statement is usually included when the account requires membership such as credit unions and secured credit card accounts.
The two statements, "agreed voluntarily to a lien" and "repay my loan in part or in full" go hand in hand and mean that you have a agreed (ahead of time) to allow them to withdraw funds (shares or escrow) to pay the debt but more importantly, . . . to withdraw enough funds to pay off the entire balance owed, or, lacking enough funds to pay it off, they can drain your account to pay as much as possible.
Also, if there is still a balance, the minimum payment will still be due next month!
Up 32. TRANSACTION SLIPS:
TEXT: My periodic statement will identify the merchant, electronic terminal or financial institution at which transactions were made, but sales, cash advance, credit or other slips cannot be returned with the periodic statement. I will retain the copy of such slips furnished at the time of the transaction in order to verify my periodic statement. You may make a reasonable charge for any photocopies or slips I request.
Key Points/Concerns:
Up 33. PLAN MERCHANT DISPUTES:
TEXT: You are not responsible for the refusal of any plan merchant or financial institution to honor the Account and/or Card. You are subject to claims and defenses (other than tort claims) arising out of goods or services I purchase with the Card only if I have made a good faith attempt but have been unable to obtain satisfaction from the plan merchant, and (a) my purchase was made in response to an advertisement you sent or participated in sending me; or (b) my purchase cost more than $50.00 and was made from a plan merchant in my state or within 100 miles of my current mailing address. Any other dispute I must resolve directly with the plan merchant.
Key Points/Concerns:
Many people mistakenly believe the following two statements:
- When disputing a purchase through a particular merchant, (shoddy workmanship, poor quality, wrong item or size and so forth) you can refuse to pay the credit card bill!
- The credit card company provides legal assistance in settling the dispute.
First, you can only refuse to pay the amount in dispute! For instance, if you charge an item for $100 and your balance is only $100 then, under certain conditions, (a & b above ) you can refuse to pay the debt!
However, if the most recent charge was the $100 above, but your balance is $500 then you must still make your monthly payment!
Why? Because your payment is applied to late charges, unpaid finance charges, fees, previously outstanding balances, and finally, new charges!
See how your payment is appliedSecond, to get legal (defense) assistance you must meet the (a) or (b) criteria.
Ask yourself how many of your purchases are because an advertisement the credit card company sent you or participated in sending you. This is criteria (a)
Criteria (b) is a bit more encompassing because of the $50 minimum purchase but still limits you to purchases within your state or 100 miles of your address. For some people this is not a problem but for frequent travelers, or people who work in or shop in an adjacent state, they will end up trying to settle the dispute on their own!
Up 34. FOREIGN TRANSACTIONS:
TEXT: Purchases and cash advances made in foreign countries and foreign currencies will be billed to me in U.S. dollars. The conversion rate to dollars will be made in accordance with (insert your credit card name here) operating regulations for international transactions.
Key Points/Concerns:
Be sure you know and understand the currency exchange rate! New overseas travelers may misunderstand the conversion rate (usually believing the U.S. dollar is worth more) and thus charge more than they think.
They are surprised to learn just how much they charged and even more shocked to learn that they exceeded their credit limit and now have to pay an "over the limit" fee, plus the amount they exceeded the limit and the minimum payment!
Up 35. RETURNS AND ADJUSTMENTS:
TEXT: Merchants and others who honor the Account and/or Card may give credit for returns or adjustments, and they will do so by sending you a credit slip which you will post to the Account. If my credits and payments exceed what I owe you, you will hold and apply this credit balance against future purchases and cash advances, or if it is $1.00 or more, refund it on my written request or after six (6) months, deposit it to my membership shares.
Key Points/Concerns:
Most people realize that they will not get a cash refund when returning an item but, most people don't realize that
Up 36. SURRENDER OF CARD (S):
TEXT: The Card(s) remains your property and, if you request, I must surrender to you all Card(s) you have issued on the Account.
Key Points/Concerns:
People are surprised to learn that they don't actually own that credit card in their wallet! Even if you refuse to send the card(s) back, they simply turn the account off and . . . you are still responsible for the balance.
Up 37. LOST OR STOLEN CARD, NOTIFICATION AND LIABILITY:
TEXT: I will notify you AT ONCE if I believe that the Card, Account number, PIN or any combination of the three has been lost or stolen by immediately calling you at (800) 555-1212 or after hours at (800) 123-4567. Telephoning is the best way of keeping my possible losses down. I understand that my total liability to you shall not exceed $50.00 for any Account and/or Card transactions resulting from the loss, theft or other unauthorized use of the Account and/or Card that occurs prior to the time I give notice to you. Such liability does not apply when the Account and/or Card is used to make an electronic transfer.
Key Points/Concerns:
First, keep your losses to a minimum by immediately calling the company . . . keep the business hours number and the after hours number handy at all times!
The statement, "the Card, Account number, PIN or any combination of the three" means that you are responsible to report even the possibility that one, two, or all three of these have been lost or stolen.
This also means that as soon as you "suspect" the card has been compromised you must report it! Failure to do so, can make you liable for any debts incurred.
Even though you may still have possession of the card, others can still access your account using your PIN so, if you even suspect the card has been compromised, report it. It's better to report it and have it turn out to be a false alarm than to not report it and end up paying for a debt you did not incur.
Second, $50 total liability does not apply to certain transactions such as Electronic Funds Transfers.
Up 38. PAYMENTS MARKED “PAID IN FULL
TEXT: You may accept checks, money orders, or other types of payment marked “payment in full” or using other language to indicate full satisfaction of any indebtedness, without being bound by such language or waiving any rights under this Agreement and Disclosure Statement. Full satisfaction of indebtedness shall be accepted by you only in a written agreement, signed by an authorized representative.
Key Points/Concerns:
Many people mistakenly believe that by writing the words "Paid in Full" or similar words on a check, relieves them of the debt if the company cashes the check. This is just not true!
A debt is never considered "satisfied" until you have a receipt signed by an authorized representative of the company that states the debt is paid in full!
Up 39. DELAY IN ENFORCEMENT:
TEXT: You can delay enforcing any of your rights under this Agreement and Disclosure Statement without losing them.
Key Points/Concerns:
In the end, the credit card company only wants their money so this statement gives them flexibility when trying to work things out with customers who's account is in default. It is not uncommon for the company to delay payments, waive fees, reduce interest, and a host of other things in order to help the customer bring the account current.
If after attempting to work it out with the customer, or the customer does not follow through on promises then, the company still has the right to enforce all of the terms and agreements.
Up 40. GOVERNING LAW:
TEXT: I understand and agree that this Agreement and Disclosure Statement is made in {your state here} and shall be governed by the laws of the {your state here} to the extent that {your state here} law is not inconsistent with controlling federal law. I also understand and agree that {your state here} choice of law rules shall not be applied if they would result in the application of non {your state here} law.
Key Points/Concerns:
The statement, means that no State can enact laws that interfere with or go against Federal Law. However, many federal laws allow states to enact laws that are stricter, more comprehensive, and offer stronger protection.
Up 41. INTEGRATED DOCUMENT (S):
TEXT: Any separate sheet of paper labeled “Additional Disclosure - Federal Truth-in-Lending Act” or letter which is delivered together with this form is an integrated part of the Agreement and Disclosure Statement.
Key Points/Concerns:
Pay close attention to the statement, "is an integrated part of" because many times you will receive one or more pieces of paper along with the Disclosure Statement, not realizing that it contains very important terms of agreement.
Read all statements, even single sheets of paper and keep them together with your Disclosure Statements.
You may also occasionally receive a additional Disclosure Statement paper(s) with your monthly statement. Always read these closely because they often contain adjustments to your interest rate, fees, and terms.
Up 42. MEMBERSHIP REQUIREMENT:
TEXT: I understand and agree that I must be and remain a member in good standing with you to be eligible for continuing Account and/or Card privileges including future purchases and advances. I understand and agree that you may suspend the Account and/or Card privileges during any period in which I do not maintain my membership with you.
Key Points/Concerns:
The statement, "remain a member in good standing" is a catchall statement that allows companies to change terms (usually interest rates) for any violation of the disclosure statement.
What exactly does "in good standing" mean? Wouldn't it be nice to know just how many missed payments it takes before you are labeled "not in good standing"?.
But, unfortunately, this statement allows companies to interpret the term "in good standing" any way they choose. Often it boils down to the interpretation of whoever is handling your account!
The other statement, "in which I do not maintain my membership with you" has a catch! If you are required to pay a membership fee and don't, your card could be suddenly turned off and then you are lumped into the category, "not in good standing"! This applies even when you forget to pay the fee or are away from home and unaware or unable to pay.
Up 43. CHANGE OF TERMS:
TEXT: This Agreement and Disclosure Statement is the contract which applies to all transactions on the Account even though the sales, cash advance, credit or other slips I sign or receive may contain different terms. I understand and agree that you may amend, modify, add to, or delete from this Agreement and Disclosure Statement any of its terms and conditions, including the method of application and the amount of FINANCE CHARGE, effective as to any unpaid balance outstanding and any subsequent advance, by mailing a notice of the change to me at my last known address. I also understand that any such notice will be mailed at least fifteen (15) days prior to the effective date of the change as required by federal or other law. Notice of a change in terms is required, but may be sent as late as the effective date of the change where the change has been agreed to, in writing, by me.
Key Points/Concerns:
Point 1: If you make a large purchase (appliance, furniture, etc.) the sales person may have you sign a sales agreement that outlines their terms and they may tell you not to worry about warranties and other consumer protection actions because your credit card protects you . . . don't believe it!
The statement, "applies to all transactions on the Account even though the sales, cash advance, credit or other slips I sign or receive may contain different terms." is a way for the company to protect itself and a warning to you to always know what type of protection your particular card offers.
Some cards do have protections but you usually pay for these add-on services and they always have criteria that you must meet in order to be protected . . . read the disclosure statements closely!
Point 2: The statement, "may amend, modify, add to, or delete from this Agreement . . . including the FINANCE CHARGE" allows the credit card company to change the terms at any time for any reason even if you've done nothing wrong!
For good customers who always pay on time this usually means they increase their credit limit or waive fees but it also applies to the opposite - higher rates and fees.
Point 3: The statement, "by mailing a notice of the change to me at my last known address" catches a lot of people by surprise. They think the company must somehow ensure they are notified by tracking them down. In reality, all they have to do is send a notice to the last known address and they have fulfilled their legal requirement to notify you under federal law.
This is why it is so important that you keep your information current. Otherwise your rates could be raised and you wouldn't know it, your bill could be delayed thus causing late fees to be assessed and so forth.
Up 44. CREDIT INFORMATION:
TEXT: I authorize you to investigate my credit standing when opening, renewing or reviewing the Account. To the extent authorized by law, I authorize you to disclose information regarding the Account to credit bureaus and other creditors who inquire of you about my credit standing.
Key Points/Concerns:
This small paragraph contains two powerful statements!
The statement, "investigate my credit standing when opening, renewing or reviewing the Account" allows the company to inquire about your credit record at any time!
This means that if you are late or miss a payment they can check your credit record and determine (or decide) that your creditworthiness has changed and therefore, under the terms of the agreement, can change your interest rates and other fees!
It also means that they can review your account anytime for any reason and when they do, they can perform a credit inquiry.
WARNING! Too many inquiries on your credit report sends up a red flag to other creditors that you may be seeking credit from; they view all these inquires as you looking for too much credit!
Up 45. CHANGE OF NAME, ADDRESS, EMPLOYMENT STATUS: ,
TEXT: I understand and agree that I must report to you any change in my name, address or employment status.
Key Points/Concerns:
This goes hand in hand with the Change of Terms above.
Up 46. COPY RECEIVED:
TEXT: I acknowledge receipt of a copy of this Agreement and Disclosure Statement and enclosed letter and agree to accept their terms.
Key Points/Concerns:
Using the card is considered the same as signing the statement! You agree with all the terms in the Disclosure Statement!
Up 47. ADDITIONAL TERMS APPLICABLE TO VISA/MASTERCARD CHECKS:
For a complete review of these terms Visa Check Card Info
Rich's Enterprises, L.L.C.,
Prattville, Alabama
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