What is Credit Card Disclosure? Credit card disclosure means details and a quality information about a credit card’s pricing and fees. Credit card disclosures helps potential card holders to compare and contrast cards so as to choose the one that best suits them.
Interestingly, it make financial institutions to give competitive pricing. The Truth in Lending Act demands that they add these credit card disclosures with credit card applications and with new credit cards. In a credit card disclosure, you will see the followings;
Credit Card Disclosure ; Fees
The fees include annual, balance transfer, cash advance, the foreign transaction fee (also called currency conversion fee), late payment fee, over-the-limit fee, and returned payment fee. The annual fee is usually fixed and some card issuers waive it for the first year. Cash advance fee is usually $5 or 5% or the advance, whichever is greater. Study the fees very well to understand them. If you cannot afford the card, simply leave it. The reason for the disclosure is to give you a variety of options to choose from.
Credit Card Disclosure ; Penalty APR
You pay penalty APR when you default your credit card terms. You will see it in the disclosure and how long it will last.
Credit Card Disclosure ; Grace Period
The grace period is the time frame you have to pay your balance in full before you pay interest. It is applicable to only purchases and nothing else.
APR means Annual Percentage Rate. There are many of them. They include;
- Purchases APR, this is based on your income, credit history and your debt.
- Cash Advance APR, it is usually $5 or 3% of the purchasing amount. It is typically higher than other APRs.
- Promotional APR. It shows the promotional period and when it ends.
- Balance Transfer APR. It states an introductory balance transfer rate within some specified time frame.
Note; All APR disclosures usually show if the APR is fixed or variable. If the APR is variable, the index rate will be shown.
Minimum Finance Charge
Each financial institution states a minimum finance charge that card holders will pay whenever they are charged interest on the account. Your minimum finance charge may be $2.00 even if your calculated finance charge is $1.75.
Finance Charge Calculation Method
Moreover, the credit card disclosure usually states how to calculate your finance charges. These institutions show the methods to calculate your finance charge using your interest rate and either your beginning balance, ending balance, average daily balance, or any other balance. However, finance charges may or may not include new purchases. It all depends on the financial institution. Money lenders do not have access to finance charges on balances that are already paid.