Understanding The Fine Print
Thursday, January 10th, 2008Before signing any contract or deal you are always told to read the fine print, and this is for a good reason. Most of the important information that is almost always overlooked is mentioned in the fine print of the document. Often this may include default terms or the eligibility of a good interest rate offer on a cheap loan or credit card. It is estimated that as much as six million consumers fail to read the small print of their contract or transaction.
A recent study reveals that more than fifty percent of adults admitted to not reading the small print when buying financial products, mobile phones or electrical goods. This is disturbing as often the lack of understanding of the fine print in your contract can lead to major problems or, in extreme cases, financial ruin. Once a repayment contract on a credit deal – such as a mortgage or personal loan – has been breached, penalties and charges can snowball, putting the consumer at risk of losing their home.
One of the most important contracts where fine print must be completely understood is the credit card agreement. All credit card companies are in the business to make a profit off their customers and with the Office of Fair Trading cracking down on unfair charges, credit card companies must then find other ways of making a profit. Some of these ways include cash withdrawal fees, foreign usage charges; higher interest rates if the cardholder defaults as well as shorter interest-free periods. It is important that consumers first read over the fine print of the credit card agreements before activating an account. Often credit card holders fail to read over their agreements properly and overlook items such as handling fees for balance transfers or the high interest rates that are charged on cash withdrawals, and in some cases credit card providers are allowed to reprice a contract should the cardholder default on payments, which means they can then start charging a higher interest rate.
