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What Your Credit Card Application is Hiding

NEW YORK (TheStreet) -- In most cases, the only way to really know what you're getting into when applying for a credit card is to meticulously read the fine print on your credit card agreement. The reality, however, is that most people have neither the time nor patience to wade through the abstruse language of pricing disclosures before applying for a card.

Therefore, CardHub.com conducted its Summer 2010 Credit Card Application Study to determine what information could be gathered from online credit card applications without reading the fine print -- what most people see before they apply for a credit card. The study evaluated applications from the 10 largest credit card issuers to determine how upfront they were in disclosing essential elements of a typical agreement. The key components identified included the annual percentage rate, common fees and rewards program information.

The study found that of the top 10 issuers, Capital One (COF), Bank of America (BAC) and Wells Fargo (WFC) had the clearest credit card applications, with scores of 96.4%, 95% and 87.9% respectively. The issuer that ranked the lowest was U.S. Bank (USB), with a score of 59.3%, followed by USAA with 77.5 percent and American Express (AXP) with 78.3 percent.

The most commonly lacking component was clear disclosure of the balance transfer fee, which can cost consumers a significant amount of money. Applicants are much less likely to look for it than for the APR.

Another area of weakness was a clear description of rewards programs for noncash-back rewards credit cards. Although it was often clear how to earn rewards (for instance, spend a dollar and earn two miles), it was often unclear how much points or miles were worth (for example, whether 10,000 miles are worth a flight to Europe or to Florida).

It's not all bad news, though. There was consistently clear disclosure of annual fee and relatively clear disclosure of the introductory and regular APRs for new purchases. The study also found that ambiguous language and phrases such as "up to" and "as low as" have significantly diminished.

What's clear from the results of the study is that consumers still must aggressively search for information they need when applying for a card. There have been some strides in card companies volunteering essential information to their customers, but old habits die hard.

Odysseas Papadimitriou is founder and chief executive of Evolution Finance, the parent company of Wallet Blog and Card Hub, an online marketplace for credit-card offers.

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