Less Than Half of Credit Card Owners Understand Terms of Use
By: Brian O'Connell

NEW YORK (sbup) — Only 47% of credit card owners say they "completely" understand their credit card's terms of use, including their interest rates and the ramifications of paying late.

According to data from J.D. Power & Associates, another big issue is credit card rewards programs.

"Customers who use their card's benefits spend an average of $400 more per month on their card, compared with those who are aware of benefits but do not use them, so clearly this is an area of importance to card issuers," says Jim Miller, senior director of banking services at J.D. Power. "While most customers change cards for a better rewards program, they often don't fully understand the rewards offered with their current card. There is a clear opportunity for issuers to better communicate rewards programs and benefits to not only keep customers loyal, but also to attract new customers."

"It is incredibly important to examine the various options before applying to just any credit card," CreditCardChaser.com says. "Many credit cards have flashy promotions, but they may not have the best interest rates or fees. Others may look great, but are reserved for those with excellent credit only."

To get the best deal on a credit card and better understand the terms and obligations that come with them, financial consumers need to ask some key questions. CreditCardChaser.com has a few ideas:

What if I have bad credit? Can I still get a card? Yes, with two main options: a secure credit card that must be "secured" with a regular cash deposit, and a student credit card (for younger consumers who don't have a credit history).

What are my primary goals in getting a new card? Aim high and know ahead of time whether you'll be using the card a lot. "It's important to think about what [you] may need and where your credit stands," says Credit Card Chaser. "For example, a consumer with a lot of debt may want to look into a card with good balance transfer terms and an extended zero percent intro APR on balance transfers. On the other hand, a consumer with excellent credit who travels often may instead want to apply for credit cards that offer rewards and discounts on travel."

Will applying for card affect my credit score? Yes, applying for multiple cards can hurt your credit. It could be a "small hit," as Credit Card Chaser says, but creditors see consumers who apply for a lot of cards as "financially irresponsible."

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

Sign Up Now for Our FREE Newsletter

Brokerage Partners

Search for Rates

US Rate Map - National Savings Rates

 
Roll over states to see best rates.
 
Lower Rates Higher Rates

This illustration shows rates based on all terms and locations of a particular state. Products may not be offered by all institutions. Individual institutions determine the availability and required qualifications of their products. Product restrictions may apply.

Calculators

Calculator Access our Savings, Mortgage, Auto Loan and Personal Finance Tools here.