This is a guest post by Amelia Granger, Senior Analyst at NerdWallet.
There are a lot of great surprises in life: birthday parties, proposals, a coworker bringing in donuts on a Wednesday. But, as we all know, not all surprises are pleasant, and one of the most unpleasant out there is a surprise charge on your credit card bill.
The Credit Card Act of 2009 was a big first step in protecting consumers against certain unfair practices credit card companies used to employ to wrench extra cash out of customers. However, there’s still a lot to watch out for. After all, credit card companies are in the business of making money, so they’re not going to let the opportunity to slap an extra fee on your bill pass them by.
They key to avoiding surprise charges on your credit card is to know your stuff – check out the four tips below to be sure that the only surprise you get in the mail is goofy card from your grandma:
Know the Lingo
Credit cards have a vocabulary all their own, and it’s important to understand all the terminology involved in your agreement with the card company to avoid getting slammed with an unexpected charge. Here are a few common credit card terms that commonly get people tied up in knots:
APR (annual percentage rate): This is the interest rate charged annually on any unpaid balance you carry on your card. This is probably one of the most important numbers to be familiar with, as this is the interest you can expect to pay to the company if you don’t pay your credit card bill by the due date.
Promotional/introductory: This term is usually tied to an APR, and it means that the rate you’re paying is temporary. Sometimes credit card companies will offer a special APR for a few months to get you to sign up for the card, and then the rate will go up after the promotional period is over. If you sign up for a card with a promo rate, it’s critical to know when the “teaser” rate is up so that you don’t get hit with a higher APR unexpectedly.
Grace Period: This is the time you have to pay your credit card bill without incurring interest. By law, the grace period is required to be at least 21 days, but many companies allow 30. Again, be sure you know how long you have to pay or you could end up having to shell out interest unnecessarily.
Read the Fine Print – It’s Easier Than It Used To Be!
One of the provisions of the Credit Card Act of 2009 is that credit card agreements – the contract you sign on to when obtaining the card – need to be presented in plain English. This means that the “fine print” is a lot easier to understand than it used to be, but you’d be surprised how many people toss this valuable information in the trash.
When you’re looking at a new card, pour yourself a cup of coffee and commit at least an hour to reading over the agreement very carefully. Look up terms you’re not familiar with and make a list of questions. Be sure you really understand what you’re signing on to before you do so.
Ask…Then Ask Again
Now that you’ve read every detail of the credit card agreement, it’s time to make a phone call to the company’s customer service line. If there’s even the smallest glimmer of doubt in your mind about any provision of that document (and there probably will be), now is the time to ask. Don’t be shy – ask whatever you need to, and if it’s still not clear, ask again. This is also a good opportunity to feel out the card issuer’s customer service standards. If the person on the other line isn’t friendly and knowledgeable, you might want to reconsider this card.
Get the Gossip
A final step to take when looking for a good credit card is to hop online and type the name of the card into an Internet search engine and see what you find. There are lots of blogs and articles out there about specific cards, but be sure to read the comments sections of informational pieces, too. This is where you’ll get the low-down on the card you’re looking at to see if other customers are really happy with it or not.
Avoiding surprises on your credit card bill isn’t as daunting as it seems if you keep these tips in mind!
NerdWallet is an independent comparison site that helps you shop for credit cards, bank accounts and more.