- Understanding the details of your credit cards can help you avoid fees and save money.
- Reading your credit card agreement may also uncover benefits you weren’t aware of, like rental car insurance and price protection.
Being an informed credit card user could save you hundreds, and possibly thousands of dollars in interest payments and fees. Understanding the details will help you select the card that’s right for you.
Unfortunately, few people take the time to read credit card agreements; in fact, 3 out of 4 people say they do not regularly read the contracts that come with a credit card.*
"What is most important to consumers is exactly how much they will be charged every month—and that information is usually located toward the end of the agreement," says Stefan Ross, vice president of credit cards at Fidelity Investments.
The annual percentage rate (APR) and fees can be found in a legal disclosure that is required to be easily found and understood. This "Schumer Box" is named for Congressman Charles Schumer, who advocated consumer-friendly language in credit card literature.
Here are 5 more things to look for in the fine print, to keep your money where you want it—in your bank account.
Rewards and points systems
Double Points! Triple Miles! What these terms actually mean depends on the card. Double points from one company might equal another card’s single-points offer.
On average, every point or mile you earn is worth between 1 to 2 pennies. In order to make an accurate card comparison, evaluate what it takes to earn points or miles and the rewards you will receive. Before signing up, make sure that the spending categories that earn the most points are areas where you’ll actually spend money, for instance, restaurants, travel, or home improvement.
Also compare any bonuses you could receive for signing up. Because the value of points varies, one tantalizing offer could be worth less than another.
Not every card charges an annual fee. When considering which credit card to carry, evaluate what you get in return for paying a fee every year. For instance, some cards with an annual fee provide a higher level of rewards than a card with no fee. Compare the cost of the annual fee to the amount of rewards you can earn every year, to figure out if it’s worth paying the fee.
“Any card that charges a fee for you to earn points must be looked at over the long term,” Ross says.
Annual fees can sometimes be negotiated. Start by calling and asking if the annual fee can be waived. Though the company may not always be able to dispense with the fee entirely, you may be able to negotiate some extra perks—particularly if it’s a card you use frequently.
Details of zero- or low-interest offers
Low-rate offers promise to help you save money if you carry a balance from month to month. But those low promotional rates will typically only hold for a matter of months. When reviewing the offer, look for the interest rate you’ll pay on new purchases after the promotion runs out. You’ll typically be told a range of interest rates before signing up, and then after applying, you’ll receive an interest rate based on your credit score.
“The average credit card APR is 16.75%,” Ross says. “If your current rate is higher than this and you have good credit, you should look for a lower rate—particularly if you carry a balance,” he says.
Even though a relatively low interest rate, like 14%, may be stellar for a credit card, it should still be used wisely.
- Read Viewpoints on Fidelity.com: 7 credit card tips
Costs and benefits of balance transfers
Transferring a balance from a high-rate card to a low- or even zero-interest-rate card potentially saves a lot of money. As always, the devil is in the details: There’s typically a fee involved, about 3% of the balance transferred.
Low- and zero-interest rates are often promotional rates, so before you sign up for an offer, evaluate how much it will add to your balance and how long the promotional rate will last.
Be sure to do the math before transferring a balance. Consider using a credit card balance transfer calculator to help. Make sure you aren’t chasing one low-rate transfer after another, meanwhile adding hundreds of dollars in fees to your balance.
The fine print also reveals any fees in addition to the annual fee, including late and returned payments. You can also find information about payment due dates. If another time of the month or a different day would be more convenient, you can generally change the due date by calling your credit card company or going to its website or app.
There may also be fees for going over your credit limit. If you’re traveling internationally, there may be a foreign transaction fee and a currency conversion fee.
- Read Viewpoints on Fidelity.com: Credit and debit card tips for international travel
Free benefits of your cards
It’s not just fees that are hidden in the details; there are many benefits you may not be aware of if you haven’t thoroughly read the offer. Here’s a brief rundown of credit card perks you may be entitled to; contact your credit card issuer to find out its policy and requirements.
Credit card perks
- Extended warranties on purchases made with the card
- Primary or secondary insurance on rental cars
- Price protection
- Purchase protection
- Travel insurance benefits
- Discounts at hotels and restaurants
- Concierge services