How to Actually Understand Your Credit Card's Fine Print

Reading the fine print of a financial agreement is a chore only a lawyer could love. But when it comes time to apply for a credit card, it’s important to know how to read the terms and conditions as well as its guide to benefits — including the fine print — if you want to realize all of the card’s possible benefits and avoid potential fees.

Sometimes the ‘Fine Print’ Isn’t So Tiny

The good news for those who hate fine print is that federal law requires that the most important terms of your credit card be printed in regular sized type or larger. Since 1989, credit card issuers have been required to disclose each card’s long-term rates in large, 18-point type, and other important terms in regular, 12-point type. These terms are always presented in a table which has become known as the Schumer Box, after New York Senator Charles Schumer (then a congressman) who championed the legislation. Required components of the Schumer Box include the annual fee (if one exists, there are no-annual-fee credit cards), the grace period, the interest rate and all other transaction fees.

But even with the 12-point type, it can be easy for cardholders to miss some things. For example, some credit cards impose unique fees such as monthly fees and authorized user fees. In addition, some credit cards do not even have a grace period, so that there is no way to avoid interest charges by paying the balance in full. Nevertheless, all of these charges must be spelled out in the mandatory terms and conditions.

What’s Still in the Fine Print

When you receive your credit card, you will also receive a guide to benefits that is allowed to include plenty of fine print. Here is where you may want to break out the magnifying glass and go on a treasure hunt for the perks that you are now entitled to. These benefits can include purchase protection, extended warranty coverage, lost luggage coverage, trip delay and cancellation insurance, travel accident insurance and an auto rental collision damage waiver.

As you read through these benefits, you will want to take note of when and where they apply, and what is excluded. For example, the auto rental collision damage waiver coverage is among the most valuable benefit offered by most credit cards, yet there can be many exclusions. So typically, the fine print will reveal what types of vehicles are not covered, which countries are excluded, and how long you have to file a claim in the event of an accident.

When it comes to purchase protection and extended warranty policies, you will want to be aware of the types of purchases that are covered, and which are not. For example, parts for any kind of motorized vehicle as well as any used goods are typically excluded from these policies.

At the same time, you are also likely to find some good news when you take the time to dig through the fine print of your credit card benefit agreement. For example, many travel insurance policies such as lost luggage or trip delay insurance used to require that the entire trip be paid for with your credit card. But now, many credit card issuers are also covering customers who book award tickets with frequent flier miles offered by their credit card.

When You Really Need to Consult the Fine Print

When the time comes that your luggage is delayed, your rental car suffers damage, or your purchase breaks just after its manufacturer’s warranty expires, this is the time you need to refer the fine print of your card’s guide to benefits. In it, you will learn where to file your claim, what documentation you will need to provide, and long you have to do so. This information is critical, as your claims will be denied if they are filed late, or sent to the wrong place.

Other Areas of Fine Print Worth Noting

If you are using a credit card that earns points or miles with a loyalty program, the program itself will have fine print containing additional terms and conditions. It can be in your interest to look through this fine print to learn about other ways to earn points or miles, and when or whether your rewards will expire. (You can check out the picks for Best Travel Credit Cards in America if you want to scope out some of the top performers.) And most important, you will want to find out all of the ways that you can redeem your rewards, so that you can choose the one that is most valuable to you. For example, the fine print for Citi’s ThankYou rewards program specifies that you can redeem your rewards toward payments to any student loan program or monthly mortgage issued in the form of a check made payable to your financial lending institution. To do that, you have to call their rewards center, a fact that few would realize if they hadn’t read the terms and conditions available on the website of the ThankYou Rewards program.

By learning how and when to read the fine print, you can enjoy all of the features and benefits of your credit card, and be fully aware of its costs.