CONSUMERS often are duped when it comes to purchases and acquiring credit (car loans, mortgages, credit cards, etc). Almost every
transaction will have some form of fine print on a receipt, contract, or an advertisement. The fine print often summarizes
important details of the transaction.
LET'S LOOK AT SOME EXAMPLES OF THE FINE PRINT:
1. CREDIT CARD OFFERS. I opt out of most credit card offers, but I occasionally receive some. Here are some details of an offer I received a few
months ago to consolidate high-interest credit cards: 0% annual percentage rate on balance transfers until February 2009;
save with a lower rate of 6.99% until the balance is paid; and simplify your expenses.
In small print was the following: "3% fee for each balance transfer." That means that on an average balance transfer of $3,000,
a consumer will pay $90 as a transfer fee, in addition to the ongoing interest charges if the balance is not paid off by the
end of the month during which the balance transfer was made. Because the average credit card holder does not pay off the balance
every month, the credit card company will make interest on the balance, as well as any future charges, if the account is not
paid off in full.2. FINANCE COMPANIES. I saw a television commercial by a finance company advertising personal loans up to $5,000. The company even enlisted a
celebrity. I did not notice the fine print until the third or fourth time I saw the commercial. In what appeared to be the
smallest print allowable on the screen was: "The interest rate is 99.25%." What? If a consumer acquired this loan over a 24-month
term, the monthly payment would be approximately $485. At the end of the 24-month term, a consumer would have paid more than
$11,000 on a principal balance of $5,000.
3. CAR COMMERCIALS. The prices, rebates, and special offers are in bold print or stated at the highest volume possible. Then comes the small
print at the bottom of the screen: "You must have a credit score of 800 or above to qualify. The outstanding balance of any
trade-in vehicle will be rolled into the new loan amount." On the radio, the "fine print" is read at a rapid speed. A word
of caution: Rolling an old car loan into a new loan will increase the loan balance and monthly payments. Also, the value of
the old car being traded or being paid off may be far less than what you owe.
4. TAX-FREE SHOPPING. My wife discovered this one. One day we were shopping for children's shoes during tax-free shopping week here in Florida.
It sounded like a great deal until we understood the fine print. Here is the scenario: Our purchases totaled $100 with a 7%
sales tax rate, which would yield a total cost of $107. We had a coupon for 10% off, which made the amount even lower.
Here is the calculation:
$100 + $7 (7% sales tax) = $107
$107 - $7 = $100
$100 - $10 (coupon) = $90
Savings of $17
Tax-free? Read the fine print: "Tax-free on the first total only. Any coupons or credits applied to the balance will be taxed
on the new total amount."
Here is the department store's calculation:
$100 + 7 (7% sales tax) = $107
$107 - $7 = $100
$100 - $10 (coupon) = $90
$90 + $6.30 (7% tax) = $96.30 Savings of $10.70
HERE ARE SOME TIPS TO HELP WITH THE FINE PRINT:
1. Read and understand the fine print of any and all purchases, big or small. The Bible states: "With all thy getting, get understanding."
Never complete a transaction until it is fully understood, including the fine print. Many consumers have been taken advantage
of due to a lack of reading and understanding the fine print.
2. Do not easily succumb to what you read or hear. I am an optimist, but I am a realist as well. If it sounds too good to be
true, it probably is not true. And if it is true, find out why. A lot of what consumers read and/or hear (advertisements)
is conditional. Be careful before you become excited.
Practice Tools
