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Credit Cards: What We Found in the Fine Print




The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

At the end of every monthly credit card statement, you’ll find text that outlines the terms of your agreement. This section defines the APR (annual percentage rate) and VR (variable rate) as well as the terms and conditions for using your card and more. For such “fine” print, it’s hardly light reading.

Important information about your credit line may be buried in the details. Consumers now have protections that shield them from unfair practices. For one, Congress introduced the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “Credit CARD Act”) to control how and when companies collect credit card fees, apply interest rates, and more. Still, it’s possible for consumers to miss or misinterpret the agreement’s terms and rate information.

To better inform consumers, we pulled information from the Consumer Financial Protection Bureau’s semi-annual survey of credit card plans. Are you really getting a deal with that zero-interest card? Read on to find out.

The Words in the Fine Print

The word cloud above represents the typical terms one might find in a credit card agreement. The larger the word, the higher its frequency. The standard conditions of any statement include BALANCE: the AMOUNT owed at the end of the billing period, including any past unpaid balance and any new PURCHASES; the FEES charged; the INTEREST charged for purchases and unpaid balances; as well as any CASH ADVANCES – the amount owed plus interest. (Cash advance annual interest rates are typically six percentage points higher than average credit card purchase interest rates.)

An annual membership fee anywhere from $9 to $99 may also apply. It’s important to note that credit card companies sometimes waive this fee initially, but it often resurfaces after a grace period.

Why is “Arbitrate” referenced so frequently? Credit card companies commonly seek protection from consumers. Binding arbitration ensures disputes regarding theft, fraudulent charges, and other issues can’t be the subject of a traditional lawsuit. Instead, these matters must be resolved through an equitable hearing, which could take up to two years (and countless legal fees) to resolve. Arbitration provisions generally appear at the end of credit card agreements, and they’re easy to overlook.

Consumer Card Debt vs. Credit Card Companies Asset-1

A small number of financial institutions dominate the credit card market. Some familiar names include Chase, American Express, Discover, and Capital One. Chase is one of the top credit card issuers in the U.S., and it owns the biggest share of consumer credit card debt. Back in 1955, Chase was known as Chase Manhattan Bank; it grew into one of the top lenders after a series of acquisitions and mergers. In 2000, J.P. Morgan & Co. merged with Chase.

American Express is another well-known and established lender. Amex is the foremost charge card issuer in the world, as well as the biggest travel company. Since its inception in the mid-1800s, it’s progressed into one of the most recognizable global financial brands. Special products like its invitation-only black card make it seem exclusive. And its numerous consumer products have made it the third-largest holder of outstanding credit balances.

Occasionally, even some of the top credit card companies have come under fire for engaging in deceptive practices. In 2015, lawmakers ordered Bank of America’s credit card division to pay out $727 million to around 1.4 million consumers for engaging in deceptive practices. Despite this, it still owns the second-largest share of outstanding balances today.

The Rates and Fees for Major Credit Card Companies Asset-2

Each credit card plan, including its payment schedule and fees, is different. For example, a consumer could hypothetically be granted a Capital One credit line with a $3,500 limit. As part of a special offer, the person also may be subject to no annual fee and receive a six-month zero-interest grace period on purchases. However, once the interest rate increases, the consumer may pay as much as 22.67% interest (Capital One average annual rate from 2010 to 2015). Prior to the increase, if the consumer makes only a minimum payment, it could take years to pay down the remaining balance. This could theoretically result in years of payments with the total interest paid potentially being higher than the original balance.

The average APR for Chase’s credit card plans is 13.1% (far above an average mortgage interest rate), and it has an average grace period (or the number of days before before the interest is assessed) of about 21 days. About 17 percent of credit cards have annual fees. On the low end, plans may charge as low as $9; on the high end, American Express has annual fees as high as $95.  

High Interest RatesAsset-3

Today, there are significantly fewer fixed-rate credit cards. The Credit CARD Act of 2009 made it difficult for card issuers to raise their interest rates for fixed-rate credit cards; as a result, banks began issuing a higher number of variable-rate credit cards so that interest amounts could fluctuate based on the market. Most credit cards will have a variable APR, which is tied to the prime rate. The prime rate as reported by The Wall Street Journal’s bank survey is among the most widely used benchmarks for determining the prime rate for credit cards. The credit card company adds a percentage margin to the variable APR. So for variable credit cards, the total APR the consumer pays in interest is the variable rate margin plus the prime rate. If the prime rate index goes up, so does the rate; if the index goes down, so does the APR.

The graph above shows the highest APR and variable-rate margins charged for credit card plans in 2015. First National Bank of Fort Pierre, SD, for example, offers a Legacy Visa that charges 29.9% APR. How does a rate like this impact a consumer’s overall debt? If a person owes a credit card balance of $1,000 and makes a minimum payment of $35, it would take over eleven years (136 months) to pay off the balance. The consumer would also pay over $1,700 in interest.

Low Interest Rates
Asset-4VyStar Credit Union, located in Jacksonville, FL, is one of the largest credit unions in the U.S. It offers a range of plans, but its platinum card guarantees a fixed-rate APR of 9.1%. The
advantages of dealing with a credit union are increased customer support, fewer hidden fees, and typically a lower interest rate. First Command Bank, located in Fort Worth, TX, offers an attractive Platinum Visa card with no annual fee, over-limit fee, balance-transfer fee, or online account access fee. It also has a variable margin rate of 3%. Plans like these are diamonds in the rough – but if you search diligently, you can find a card that’s affordable over time.

Credit Cards Create EqualityAsset-5--GIF_08-02-16 (1)

Back in the 1990s and earlier, credit cards were a luxury. Financial institutions assessed annual fees based on the exclusivity of owning a card, and the associated APRs were steep as well. Today’s credit cards have leveled the playing field. Anyone can get a credit card. But much like the subprime mortgage crisis of 2008, where anyone could obtain a mortgage regardless of his or her ability to pay, credit cards can drive down one’s credit score and saddle them with unnecessary debt.


Companies may offer 0% APR, a generous grace period, and cash-back incentives, rewards, airline miles, and more, but just below those promises is fine print that can add up to costs potentially exceeding one’s original debt. The bottom line: buyer beware.

To get the most out of a credit card, it’s a good idea to follow these tips: Compare a credit card offer to additional offers, and pay careful attention to the fine print of each; if possible, don’t carry a balance, and always pay off the balance every month. If all else fails, remember, mounting debt can lead to a poor credit score. Help is available.  


We analyzed all the credit card agreements contained in the Consumer Financial Protection Bureau’s “Survey of Credit Card Plans” since 1990. For the list of top credit card companies in the U.S., we utilized The Nilson Report’s research on the top U.S. credit companies, parsing it by highest outstanding consumer balance. For the word cloud, we chose the top plans from each of the top credit institutions, and combined all the text to create the list of words depicted.

Fair Use

We grant permission to share the images found on this page freely. When doing so, please attribute the authors by providing a link back to this page so your readers can learn more about this project and the related research.


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Credit Cards

Does Getting Joint Credit Cards Have an Impact on Both Spouses’ Credit?



couples credit history

While marriage can help you improve your financial situation, it does not automatically mean that you and your spouse will share a credit report. Your credit records will remain separate, and any joint accounts or joint loans that you open will appear on both of your reports. While this can be advantageous, it’s critical to remember that joint account activity can effect both of your credit scores positively or negatively, just as separate accounts do.

Users Who Are Authorized

An authorized user is a user who has been added to an existing credit account and has been granted the authority to make purchases. Authorized users are typically issued a card bearing their name, and any purchases made by them will appear on your statement. The primary distinction between an authorized user and a shared account owner is that the account’s original owner is solely responsible for debt repayment. Authorized users, on the other hand, can always opt-out of their authorized status, although the principal joint account owner cannot.

If your credit score is better than your spouse’s as an authorized user, he or she may benefit from a credit score raise upon account addition. This is contingent upon your creditor notifying the credit bureaus of permitted user activity. If your lender does report authorized users, the activity on your account may have an effect on both you and your spouse. However, some lenders report only positive authorized user information, which means that late payment or poor usage may not have a negative effect on someone else’s credit. Consult your lender to determine how authorized users on your account are treated.

Joint Credit Cards Have an Impact on Your Credit Score

Opening a joint credit account or obtaining joint financing binds both of you legally to the debt’s repayment. This is critical to remember if you divorce or separate and your spouse refuses to make payments, even if previously agreed upon. It makes no difference who is “responsible,” the shared duty will result in both partners’ credit histories being badly impacted by late payments. Regardless of changes in relationship status or divorce order, the creditor considers both parties to be liable for the debt until the account is paid in full.

Accounts Individuals

Whether you’re happily married or divorced, you and your spouse may decide to open separate credit accounts. Most creditors will enable you to transfer an account that was previously joint to one of your names if both of you agree. However, if there is a debt on the account, your lender may refuse to remove your spouse’s name unless you can qualify for the same credit on your own. Depending on your financial status, qualifying for financing and credit on a single income may be tough.


While creating the majority of your accounts jointly with your spouse may make it easier to obtain financing (two salaries are preferable to one), reestablishing credit independently following a divorce or separation is not always straightforward. To make matters worse, your spouse may wind up causing significant damage to your credit rating following the separation, either intentionally or through irresponsibility – making the financial situation much more difficult.

Before you rush in and open accounts with your spouse, take some time to discuss the shared responsibility of these accounts and what you and your husband would do in the event of a worst-case situation. These types of financial discussions can be difficult, especially when you rely on items lasting a long time, but a mutual understanding and respect for each other’s credit can go a long way toward keeping your score when sharing an account.

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Credit Cards

Should you pay down debt or save for retirement?



rebuilding credit

While establishing a comprehensive, workable budget is undeniably one of the most important factors in maintaining a healthy financial life, it can also be one of the most difficult. For those who are struggling with personal debt, building a budget can be particularly challenging. When the money coming in has to stretch like a contortionist to cover expenses, it can be hard to determine where to focus — and where to trim.

Sometimes, the battle of the budget can come down to a choice between dealing with the present — and thinking about the future. When your income is running out of stretch, do you pay off your existing debt, or do you start saving for retirement? At the end of the day, the solution to that particular dilemma depends on the type of debt you have and how far you are from retiring.

If you have high-interest debt, pay it down

When considering how to allocate your budget, it’s important to understand the different kinds of debt you may have. Consumer debt can be categorized into two basic types: low-interest debt and high-interest debt, each with its own impact on your credit (and your budget).

In general, low-interest debt consists of long-term or secured loans that carry a single-digit interest rate, such as a mortgage or auto loan. Though no debt is the only real form of good debt, low-interest debt can be useful to carry. For instance, purchasing a home with a low-interest mortgage can actually save you money on housing costs if you do your homework and buy a house well within your price range.

High-interest debt, on the other hand, typically has a hefty double-digit interest rate and shorter loan terms, such as that of a credit card or payday loan. High-interest debt is the most expensive kind of debt to carry from month to month and should always be priority number one when building a budget.

To illustrate why you should focus on high-interest debt above everything else, consider a credit card carrying the average 19% APR and a $10,000 balance. If the balance goes unpaid, that high-interest credit card debt will cost $1,900 a year in interest payments alone. Now, compare that to the stock market’s average annual return of 7%, and it becomes clear that you’ll see significantly more bang for your buck by putting any extra funds into your high-interest debt instead of an investment account.

If you are having trouble paying off your high-interest debt, there may be some steps you can take to make it more manageable. For example, transferring your credit card balances from high-interest cards to ones offering an introductory 0% APR can eliminate interest payments for 12 months or more. While many of the best balance transfer cards won’t charge you an annual fee, they may charge a balance transfer fee, so do your research. You’ll also want to make sure you have a plan to pay off the new card before your introductory period ends.

Most balance transfer offers will require you to have at least fair credit, so if your credit score needs some work, you may not qualify. In this case, refinancing your high-interest debt with a personal loan that has a lower interest rate may be your best bet. Make sure to compare all of the top bad credit loans to find the best interest rate and loan terms.

If you’re nearing retirement, start to save

The closer you get to retirement age, the more important it becomes to ensure you have adequate retirement savings — and the more pressure you may feel to invest every spare penny into your retirement fund. No matter your age, however, paying off your high-interest debt should always remain the priority, as it will always provide the best rate of return (as well as likely provide a credit score boost).

Indeed, no matter how tempting it becomes, you should avoid reallocating money you’ve dedicated to paying off high-interest debt to save for retirement. Instead, the focus should be on re-evaluating your budget to find any additional savings you can. To be successful, you will need to make a strong distinction between want and need — and, perhaps, make some tough lifestyle choices.

Though simply eliminating your daily coffee drink won’t magically provide a solid retirement fund, saving a few bucks by homebrewing while also eliminating a pricey cable bill in favor of an inexpensive streaming service — or, better yet, free library rentals — can add up to big savings over the course of the year. The ideal strategy will involve overhauling every aspect of your lifestyle, combining both large and small cuts to develop a lean budget structured around your long-term goals.

Of course, while you should never allocate debt money to your retirement savings, the reverse is also true. It is almost always a horrible idea to remove money from your retirement account before you hit retirement age — for any reason. Withdrawing early means you will be stuck paying hefty fees for withdrawing money early and, depending on the type of account, you may also have to pay significant taxes.

Aim for both goals by improving income

As you take the necessary steps to pay off debt and save for retirement, you may have already stretched the budget so thin it’s practically transparent. In this case, it is time to consider ways to improve your overall income. Increasing the amount you have coming in not only provides extra savings to put toward your retirement, but may also speed up your journey to becoming debt-free.

The easiest solution may be to look for ways to increase your income through your current job; think about taking on additional shifts or overtime hours to earn some extra cash. Depending on your position — and the time you’ve been with the company — consider asking for a pay raise or promotion, as well.

If you do not have options to make more money at your day job, it may be time to find a second job. Look for opportunities that provide flexible schedules that will accommodate your regular job; many work-from-home positions, for example, can easily fit into most work schedules. Doing neighborhood odd jobs, such as babysitting and dog walking, may also provide a solid income boost without interfering with your existing job.

For some, the need to pay off debt and improve retirement savings can be more than just a source of stress — but a hidden opportunity to begin a new career adventure. Instead of being weighed down by yet more work, use the desire to better your budget as a reason to explore the profit potential of a passion or hobby. Starting a small online store, part-time consulting service, or other small business can be a great way to improve your income and your overall happiness.

While it may sound intimidating, starting a side business can be as simple as putting together a professional looking website and doing a little marketing legwork to spread the word. And no, building a website isn’t as scary — or expensive — as it seems, either. A number of the top website builders now offer simple drag-and-drop interfaces perfect for putting together a professional-looking web page in minutes (without breaking the bank).

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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How does a loan default affect my credit?



loan default

Nobody takes out a loan expecting to default on it. Despite their best intentions, people sometimes find themselves struggling to pay off their loans. These types of struggles happen for many reasons, including job loss, significant debt, or a medical or personal crisis.

Making late payments or having a loan fall into default can add pressure to other personal struggles. Before finding yourself in a desperate situation, understanding how a loan default can impact your credit is necessary to avoid negative consequences.

30 days late

Missing one payment can further lower your credit score. If you can pay the past due amount plus applicable late fees, you may be able to mitigate the damage to your credit, if you make all other payments as expected.

The trouble starts when you (1) miss a payment, (2) do not pay it at all, and (3) continue to miss subsequent payments. If those actions happen, the loan falls into default.

More than 30 days late

Payments that are more than 30 days past due can trigger increasingly serious consequences:

  • The loan default may appear on your credit reports. It will likely lower your credit score, which most creditors and lenders use to review credit applications.
  • You may receive phone calls and letters from creditors demanding payment.
  • If you still do not pay, the account could be sent to collections. The debt collector seeks payment from you, sometimes using aggressive measures.

Then, the collection account can remain on your credit report for up to seven years. This action can damage your creditworthiness for future loan or credit card applications. Also, it may be a deciding factor when obtaining basic necessities, such as utilities or a mobile phone.

Other ways a default can hurt you

Hurting your credit score is reason enough to avoid a loan default. Some of the other actions creditors can take to collect payment or claim collateral are also quite serious:

  • If you default on a car loan, the creditor can repossess your car.
  • If you default on a mortgage, you could be forced to foreclose on your home.
  • In some cases, you could be sued for payment and have a court judgment entered against you.
  • You could face bankruptcy.

Any of these additional consequences can plague your credit score for years and hinder your efforts to secure your financial future.

How to avoid a loan default

Your options to avoid a loan default depend upon the type of loan you have and the nature of your personal circumstances. For example:

  • For student loans, research deferment or forbearance options. Both options permit you to temporarily stop making payments or pay a lesser amount per month.
  • For a mortgage, ask the lender if a loan modification is available. Changing the loan from an adjustable rate to a fixed rate, or extend the life of the loan so your monthly payments are smaller.

Generally, you can avoid a loan default by exercising common sense: buy only what you need and can afford, keep a steady job that earns enough income to cover your expenses, and keep the rest of your debts low.

Clean up your credit

The hard reality is that defaulting on a loan is unpleasant. It can negatively affect your credit profile for years. Through patience and perseverance, you can repair the damage to your credit and improve your standing over time.

Consulting with a credit repair law firm can help you address these issues and get your credit back on track. At Lexington Law, we offer a free credit report summary and consultation. Call us today at 1-855-255-0139.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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