5 Questions to Ask Your Credit Card Company

March 08, 2016

National Consumer Protection Week, from March 6 to March 12, involves numerous organizations focused on helping to empower consumers to make informed decisions about financial products and services. Nowhere do I see a greater need for this than with credit cards. In my role as a resident financial planner, I have spoken to too many people who did not fully understand their credit card. The lack of understanding cost one employee hundreds of dollars in fees. If you are either shopping for a credit card or unsure of how your credit card works, consider asking these 5 questions:

What is your interest rate? Many credit cards will entice you with low interest introductory rates, particularly on credit card balance transfers. Ask what the interest rate will be after your introductory period so you won’t go into sticker stock. Also see if the interest rate is a fixed rate or variable rate.

What is your credit card’s grace period? A grace period is the number of days you have to pay your balance in full without accruing interest. Knowing this number will help you to understand how long you have to pay off the card before you are hit with interest.

What happens if you pay late? Ideally, you would never want to pay late, but life happens. Contact your credit card company and ask what exactly happens if you are late. In some instances, your interest rate can go up significantly after being delinquent for 60 days and you may be charged a late fee.

What credit card fees do they charge? Ask if there is an annual fee, even if you think there isn’t one. You may not have seen one because it was waived the first year or you didn’t realize that you paid the fee. There is generally a fee for cash advances, balance transfers and over-the-limit transactions to name a few.

How do I earn rewards? Not knowing the answer to this question cost me about $300 in rewards. Ask how exactly you earn rewards so you can take advantage of every purchase.

Taking the time to make sure you understand your credit card terms can save you hundreds of dollars in fees. It also puts you in the driver’s seat to get the most out of your credit card or to change companies if your terms are unreasonable. To quote my favorite cartoon as a kid, GI Joe, “knowing is half the battle.”