How to See Past the Deception of Credit Card Offers

Credit card promotions, like any form of advertising simply have one goal: Entice and encourage you to apply for their offer. With all forms of marketing and promotion, the advertising will tend to balance on the line of misleading to sound as attractive as possible.

In the fiercely competitive market for credit cards, financial providers manipulate the way features are presented in their campaigns, whether with ambiguity or hidden nuances in the terms and conditions.

Interest Free Days

The most common 'misleading' feature for credit card offers would have to be the phrase 'Interest free days'. Commonly advertised as '44' or '55 Interest Free Days', it is ambiguous and can be registered in two ways:

• Interest rates are calculated on a yearly basis - 55 days interest free means that for the first 55 days after a purchase, no interest is accumulated. Obviously after that, you still have a relatively long 310 days of interest to pay for.

• "If you pay for your purchase in the first 55 days, you won't have to pay any interest on it."

As you can see, the latter sounds much more appealing. This is the definition that people inexperienced with credit cards tend to believe, not to mention the meaning your credit card provider would prefer you to know. It's not an appalling 'lie' that the credit card providers are running - it's simply an enticing feature which people think is better than it actually is.

Reward Program Point Capping

The deceptive nature of reward credit cards doesn't lay in the ambiguity of the promotional phrases, more so the fine print. People tend to compare reward offers on the conversion rate i.e. '1.5 Reward Points for every $1 spent'. When analyzing reward credit cards, the main focus should be any mention of point capping in the fine print.

Point capping is fairly self explanatory - once your points reach a certain point, the conversion rate is capped. You'll be very disappointed to find out your ultimate rewards scheme is suddenly yielding you nothing after you've spent only $25,000 since your points have been capped.

A credit card which currently features no point capping is the Qantas American Express Premium Card - by far the most suitable option for those with high spending lifestyles.

Introductory Offers

These can really do some damage if they go unnoticed. Any feature of a credit card can be an introductory offer - one fairly common offer looks like this:

• Pay no annual repayments or fees*

No annual fees are a seductive offer - make sure you follow up the asterix however, as it will typically be buried somewhere in the Terms and Conditions with:

• *No annual fee only applicable for first year customers who spend a total of $2000 for purchases on their credit card.

As you can see, It's really not that difficult to find out the truth behind the features of your credit card offer.

However with so many nuances to be on the lookout for, it's easier to let one deceptive phrase pass you by and rack up your fees and repayments while you remain oblivious.

Features are not Concrete

After all your careful comparison of credit cards and analyzing of fine print to find the right one for you, there's still one killer that will appear somewhere among most credit card offers.

• Interest rates, fees and features subject to provider change at any point in time

A recent case in the Australian market would have captured even the savviest of credit card users. The lowest interest rate card, the 'St George Vertigo MasterCard' was well ahead of its competition with an interest rate of 10.99%.

After a hoard of people had successfully applied, their interest rate was raised to 11.89%, effectively skyrocketing the revenue markup from their applicants.

There is little to protect yourself from cases like these - credit card offers are volatile and financial providers have the right to change their features at will, whether from external influence (a national interest rate rise for instance), or for their own desires.