CONSUMER ALERT: EVALUATE CREDIT CARD OFFERS CAREFULLY

Credit card offers touting low annual percentage rates or balance transfer deals may look tempting, but Attorney General J. Joseph Curran, Jr. says many consumers find that the low interest rate doesn’t last or they are hit with unexpected fees after getting the cards. The latest issue of Curran’s Consumer’s Edge newsletter explores the "catches" in credit card offers.

For example, a consumer who got a new credit card with a 5.9% interest rate was happy until the rate skyrocketed to 21%. Reason? She had made a payment late to another creditor. Another consumer took advantage of an offer to transfer her balance to a card with zero percent interest– but her first statement showed a $90 transfer fee.

Curran noted that many consumers carry high balances on their credit cards, so unexpected fees and interest rate increases have a serious impact. "To avoid these unpleasant surprises, consumers should read credit card offers carefully," Curran said.

Some items to check out include:

• How long will that promised low rate last? Often, a low rate is an introductory rate that will last a few months and then jump to a very high rate. Consumers should find out how long the introductory rate will last and what their rate will be when the low rate ends.
  
• Will the interest rate be raised if you make a late payment, or for any another reason? Some common reasons for "penalty" increases include being late (even by one day) with a payment; making a payment late to any other creditor; or having a balance that goes over the credit limit.
  
• Balance transfer fees: An offer to transfer your balance to a card at no interest or very low interest sounds tempting, but often comes with a fee–3% or 4% of the balance. On a $4,000 transfer, a 3% fee amounts to $120.
  
• You’re pre-approved for the card: Don’t count on it. The credit card company got your name on a list of consumers that meet certain basic criteria. Once you apply, it will seek your full credit report to determine if your qualify. It might decline to issue you a card, or send you a card with a higher interest rate or lower credit limit than advertised.
  
• No annual fee: Sometimes this promise is good only for the first year. After that, you may be automatically billed for an annual fee.

Curran's office distributes The Consumer's Edge through more than 800 businesses, agencies, schools, and community associations. Groups interested in receiving a monthly issue should call 410-576-6956.

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