| February 27, 2012

How well do you understand your credit card agreement?

Credit card debt is one of the most common balances Americans hold, and it can also be one of the most damaging. Unlike student loans, mortgages or auto loans, credit cards are revolving accounts, which allow consumers to continue spending even when they are struggling to make existing payments. But another one of the top reasons many Americans fall into credit card debt is because they fail to understand the terms of their agreement and how their spending behavior impacts their debt.

Lawmakers have made a number of strides regarding credit card disclosures and statements that allow consumers to better understand their accounts. For example, card issuers must now display a graphic that informs cardholders of how long it will take them to pay off their balance in full if they only make the minimum payment. While this information may encourage adults to pay more than the minimum balance each billing cycle, a new study shows consumers still need to be careful when looking over their statement.

The study, conducted by Harvard Business School, tracked the behavior of customers who were given a disclosure statement that provided the difference in overall cost if they paid only the minimum amount vs. the amount they would need to pay to eliminate their balance in three years. The participants who chose the latter option, however, were those who carried the larger balances, paid down their debt more slowly and had lower credit scores. And despite making higher payments, the study found that their balances continued to climb. This is largely because the disclosure did not explain that lenders revise the figure each billing cycle and many cardholders are not aware that their payment amount is being reset.

The same types of misunderstandings may exist when it comes to interest rates, cash advances and balance transfers. Many consumers who don’t read the fine print may be unaware that although their standard interest rate may be a low 10 percent, the rate for cash advances may be as high as 25 percent. In addition, consumers who transfer a balance may benefit from a 0 percent interest rate for a few months, but this rate may not apply to new purchases being made with the credit card.

For these reasons, consumers are advised to always read their credit card disclosure agreement in its entirety. Consumers who understand their card’s terms and conditions may be in a better position to make wise spending and repayment decisions that can shield them from unexpected debt.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

All Consolidated Credit counselors are certified personal financial counselors (CFC) We've helped 5 million people get out of debt! Call us today and see what we can do for you.

Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

The National Industry Standards for Homeownership Education and Counseling are a set of guidelines for quality homeownership and counseling services. Industry professionals who adopt these standards can be trusted to provide consistent, high quality advice.
Click here to learn more.

Consolidated Credit Consulting Services, Inc. has been verified as the owner or operator of the Web site located at www.consolidatedcredit.org. Official records confirm Consolidated Credit Consulting Services, Inc. as a valid business. Call us today and see what we can do for you.

Consolidated Credit is a Certified ISO 9001 company, as verified through Bureau Veritas Certification.

Time tested and customer trusted. Consolidated Credit Counseling Services has been a BBB Accredited Business since 1998 and has a current A+ rating. Call us today and see what we can do for you.

View the Consolidatedcredit.org review status

Time tested and customer trusted. Consolidated Credit Counseling Services has been a BBB Accredited Business since 1998 and has a current A+ rating. Call us today and see what we can do for you.

View the Consolidatedcredit.org review status

Consolidated Credit is proud to be an ANAB accredited member. Accreditation by a recognized and respected body such as ANAB ensures the impartiality and competence of our company. To see what we can do for you, give us a call.

U.S. Department of Housing and Urban Development - HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. Consolidated Credit is proud to be a member of HUD and also part of the Hope Now Alliance.

You can save!

With this amount of debt, you'd pay around $xx.xx on a DMP.

FREE Debt Consultation
VE Interactive