What is a credit card disclosure?
Each credit card offer has specific details about the credit card’s pricing and fees to give. Since all credit card companies are required by law to disclose the same pricing information, consumers can better compare credit cards and choose the credit card that best suits their cost preferences.
The required credit card disclosure also forces some credit card companies to offer competitive prices. The truth in Lending Act obliges credit card issuers to include these credit card details with credit card applications and with new credit cards. Here’s what you can expect to see in a credit card disclosure.
Credit cards often come with multiple APRs (APRs) and they must all be revealed on the credit card disclosure.
- April for April purchases or regular April Multiple APRs or April range may be listed. The April you qualify for is based on your credit history, the amount of your debt, and income.
- Promotional APRs must be listed, along with the promo rate deadline, and whether certain promotions terminate the promo rate immediately.
- April Balance Transfer An introductory balance transfer rate should be listed as well as the rate of time, and post-promotional April balance transfer. For some credit cards, April balance transfer and April purchases may be the same.
- April prepayment April prepayment is usually higher than for other APRs.
- Every April disclosure must state whether the APR is fixed or variable. If the APR is variable, the disclosure should list the index rate.
The grace period is the amount of time you have to pay your balance in full before paying interest. The time limit on the credit card disclosure may appear in a section as “How to avoid paying interest on purchases.”
Note that grace periods generally only apply to purchases, not balance transfers and cash withdrawals. That means that interest on these balances starts accruing immediately. The deadline cannot apply if there was a balance at the beginning of the billing cycle.
Credit card companies often give a minimum fee that you pay when interest is charged on the account. For example, your minimum fee may be $ 1.00 even if your calculated financing cost is $ 0.75.
Finance fee calculation method
Credit card disclosure must indicate how your financing costs are calculated. Credit card companies use some methods to calculate your borrowing costs with your interest rate and either your opening balance, ending balance, average daily balance, or a set balance. Financing costs are or may not be new acquisitions.
Credit card companies are no longer allowed to measure financing costs on balances that have already been paid, ie to calculate the double billing cycle method of financing costs.
Credit card disclosure must include a list of fees associated with your credit card. While these credit card fees vary, some are common credit card fees, but are not limited to annual fee, balance transfer fee, prepayment fee, the foreign transaction fee (also called currency conversion fee), late payment fee, over-the-limit fee, and returned payment fee.
Some fees, such as the annual fee, are set. Other costs, such as an advance payment or balance transfer fee, may be set or vary on the transaction amount. For example, a prepayment fee can be $ 5 or 5% or the progress, whichever is greater.