TOM: Good Morning, Mellody.
MELLODY: Good Morning, Tom!
TOM: An important topic this morning – reading the fine print. What caused you to want to talk about this?
MELLODY: This past week there were articles on the Huffington Post and in the New York Times discussing the new trend of companies putting non-compete clauses in the contracts of entry level workers, and it got me thinking about how much fine print we encounter every day. Every time we purchase music online, there are terms and conditions. Every time you update your smartphone’s software, you have to agree to terms and conditions. And of course when we make bug decisions, like buying a car, we have to sign on the dotted line. Because of that, I thought it would be good to highlight some of the more important pieces of fine print that our listeners encounter.
TOM: When i think about fine print, the first thing that comes to mind is credit cards. What do you have for us on that front?
MELLODY: You are right to think about that, tom, especially given the role that credit plays in the united states. There are currently around 400 million credit accounts open, or about 1.6 accounts for every American over the age of 18. And now is a great time to talk about credit card applications, because they are once again on the rise. Since 2010, the number of credit card applications and the number of credit accounts opened has been trending upward, rebounding from the previous 3 years, when Americans were closing accounts and consolidating the number of credit cards they had in the lead up to, and during, the great recession.
Now you know me, Tom. I always caution against credit cards, because most of us do not exercise great judgment when it comes to plastic. But, if you have taken the time to look at your finances and you have decided that you will be applying, there are some things to think about. The first thing to remember when you are thinking about the fine print on credit cards is that a credit application is a contract. This means that once you have signed the application, you are committed to the terms within the agreement, even if decide later that you don’t want or need that credit card. Because of this, you have to read the application very carefully and understand it before signing, taking into consideration the interest rates, the credit limit, annual fees and any other terms and conditions.
TOM: What specifically should we look for here?