decode credit card agreement

Decoding Your Credit Card Agreement

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What you don’t know about your credit card agreement can definitely hurt you, so it’s imperative to understand what you’re agreeing to when you sign up for a credit card.


Rule No. 1 is that you must read the credit card agreement. The whole thing. There’s no getting around it. Not reading it is like trying to take off in a helicopter without ever having taken a course in how to fly one.


Reading the agreement, however, doesn’t mean you’ll immediately understand it all. Here are some points to look for that can make it a bit easier to decode the agreement:


  • Look for the Schumer box that contains basic information such as the card’s annual percentage rate. The box calls out key points that you should know about the agreement. It’s not everything, but it’s a good thumbnail to start with.


  • Pay close attention to the section on fees. This is where the disclosure should tell you what triggers a fee and what the exact fee will be. For example, this section should tell you how many days a payment must be late before you’ll pay a late fee.


  • Look for the section that tells you when and why your interest rate may change. Federal law stipulates that in most cases a card issuer typically can’t raise your rate in the first 12 months of an agreement unless you have a payment that is 60 or more days late. Some other exceptions include if the card has a variable rate or there’s a payoff agreement in place and you don’t make your payments as agreed.


  • Be sure you understand your annual percentage rate (APR), and how the card issuer sets it.


Still have questions? Pick up the phone and have customer service walk you through the agreement. Ask them to point out the specific sections of the agreement that answer your questions.


Understanding your credit card agreement is an important part of monitoring your credit usage. Not knowing what you’re agreeing to is a sure-fire way to run into trouble and unexpected costs later on.



This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from, Inc.  © 2013, Inc.  All rights reserved.