Here's something that might get all those puzzled people on the hit TV dramas Lost and 24 really scratching their heads: Make them decipher the mail that credit card companies send out.
Consumer groups have been complaining for years about the sad state of credit card industry disclosures, but little has been done to improve that lately. To the contrary, credit card issuers have gotten absolutely masterful about meeting the specific requirements of the rules without really telling you what you need to know.
If there's one thing the credit card industry has learned, it's how to give themselves plenty of wiggle room in their cards' terms & conditions, says Justin McHenry of Indexcreditcards.com, a comparison site.
Many cards offer tiered rates, which means you could get a rate as low as X, but you could also get a rate 2, 4, 6, 8 or 10 percent higher, and you won't know for sure until you actually apply.
Almost two years ago, then-comptroller of the currency John Hawke, Jr., warned the national banks his office regulates that it would take supervisory action if they engaged in deceptive practices. But there have been no actions taken by that office since then against any specific banks, according to the agency's own Web site.
So, as is often the case in consumer issues, it's a protect-yourself situation. Here are some questions that those credit card disclosures raise, along with some possible answers.
-- What comes first, the terms or the application? Surprisingly, in most situations, it's the application. Most banks won't show all credit card terms until you've given them specifics about your Social Security number, your address and your income. That's so they can peg the exact rate, terms and conditions to your credit score and credit history.
You're being optimized, with sales literature that says things like up to 12 months at interest as low as 0 percent.
You're being shown a customized offer is the polite way a spokesman for HSBC Bank phrased it. That puts you in the position of having to actually put your credit history at risk to apply for a card before you see exactly what card you're going to be approved for.
There are two ways to handle this. McHenry suggests not applying for cards that don't disclose all of their terms up front, but that's likely to make your list of potential lenders very, very short. Even those banks, like Citibank, which do post card terms before you apply, don't tell you how big your credit line is going to be. If you're looking for a big balance transfer deal, that's an important factor.
The alternative is to apply for several cards all at the same time, compare the deals you are offered and then cancel all but the one you like best. That's not likely to hurt your credit score much: To a seasoned lender, having several inquiries at the same time just looks like comparison shopping. But just in case, don't try this if you're about to apply for a home mortgage.
-- What are they hiding?
Here are some especially problematic terms that can be in your contract: Two-cycle billing. This uses two months of balances to come up with the average daily balance. It can be a big problem for borrowers who only rarely keep balances from one month to the next, because they'll end up paying two months interest for one month's debt. Universal default. This means your card company could raise your rates if you're late on somebody else's bill somewhere else.
If your credit history profile changes at all, they can view that as a signal to raise your rates. Over-limit fees. If you have a $5,000 credit limit and you use your card to buy something that costs $5,010, don't expect the charge to be denied. Instead expect your issuer to charge you a fee of $30 or more. Maybe you think that's worth it for the convenience.
Due times, not just dates. Many, if not most, issuers now consider a bill late if it arrives on the due date after a certain time of day -- typically before the mail is delivered. Then you can get busted for being late, a situation that can jack up your rate to levels over 20 percent and add another $30 or more in fees.
-- Crunch your own statements. Issuers say they could end up spending as much as $57 million to provide customers with customized minimum payment and balance disclosures, but most customers say that's what they want, according to a new report from the Government Accountability Office.
Individualized disclosures like that would let you know how long you'd have to make those minimum payments before you'd bust your balance to zero, and how much you'd pay in interest in the meantime. Don't hold your breath waiting for those statements. Go to an online calculator such as the bankrate Web site (http://www.bankrate.com/brm/calc/creditcardpay.asp) to get your own answer.