LESSON
READING
Identify cause and effect
7
GET READY
Susan is reading an article about choosing a credit card. Have you ever received an offer
to apply for a new credit card? What types of offers do credit card companies make to get
new customers?
READ
Listen and read the article. What kind of advice does the article give?
“Pay no interest for six months!” “Earn 5% cash
back!” “Apply now and get $100!” Most of us have
received credit card offers like these. Unfortunately,
many of these offers are too good to be true. It’s
important to review any offer carefully, if you want to
avoid making a costly mistake. Here are some common
mistakes people make when choosing a credit card.
1. Getting fooled by introductory rates.
Many customers are attracted by offers with
interest rates as low as 0%. However, they don’t realize that these low rates expire after
a short period of time. “After six months, my rate changed from 0% to 39%!” says Gary G.
“Suddenly I was paying these really high interest charges.”
2.
Not reading the fine print.
The law requires credit card companies to give you the terms
of their offers in writing. Usually these are in small print on the application. Not reading these
details can get you into trouble. “I didn’t realize that the card company charged a low-activity
fee if I didn’t use the card in 12 months,” says Maria J. “I couldn’t believe they could charge
me for not using their card!”
3.
Not comparing APRs.
Credit card companies must state the interest rate they charge as
an Annual Percentage Rate, or APR. You can save money if you look at many different offers
and compare the rates. “I thought all cards were the same, so I didn’t shop around,” says
Janelle P. “I could have gotten a much lower rate.”
4.
Looking only at the rewards.
Many cards reward customers for purchases with cash back,
airline tickets, or even donations to their favorite charity. Rewards are great, but be sure to
consider all the terms of the offer. Reward cards frequently charge higher interest and fees.
“My card paid 1% cash back,” said Bob V. “But I was paying more in fees and interest than
the value of my rewards!”
Offers You Can Refuse
112
UNIT 8
