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Good News Lies Behind Credit Card Fine Print

ARLINGTON, Va. (TheStreet) -- Think back to the last time you applied for a credit card. If you're like most people, you probably didn't read the fine print. Who has the time, let alone the patience, to wade through all that tiny, dense text, right?

Unfortunately, credit card companies bury important account information in the fine print, and being unaware of their crucial information can lead to misuse. How can you avoid such an unfortunate event?

Card issuers bury vital information in fine print no one reads, so find one with transparent applications.

Find an issuer with transparent applications.

Credit card application study
According to Card Hub's 2011 Credit Card Application Study, Capital One (COF) and Bank of America (BAC) do the best job of the 10 largest credit card companies in the U.S. at presenting key account terms clearly within their applications.

This annual study examines multiple online credit card applications from each of those top 10 issuers and assigns each issuer a score based on how well it displays information about annual fees, the cost of revolving and transferring balances and on earning and redeeming rewards. As far as the study is concerned, information in the fine print doesn't exist.

Other major findings
Besides tapping Capital One and BofA as having the most straightforward applications, Card Hub's study revealed a number of other important facts and trends, including further proof for increasing transparency throughout the credit card industry. The highlights are as follows:

  • Nine of the 10 largest credit card companies in the U.S. increased their application clarity ratings relative to last year -- Wells Fargo (WFC) being the exception, but still falling less than one percentage point.
  • The lowest score this year, Citi's (C) 82.1%, was more than 20 percentage points higher than last year's 59.3%, belonging to U.S. Bank (USB).
  • U.S. Bank improved its clarity rating by more than 32 percentage points relative to last year.
  • The most clearly listed terms across all issuers were: purchase APR, annual fee and the rewards earning policy.
  • The least clearly listed terms across all issuers were: balance transfer fees and the rewards redemption policy.

Conclusion
Transparency within the credit card industry was a hot-button issue during the Great Recession. The CARD Act was said to have improved transparency by curtailing bait-and-switch tactics, eliminating outrageous penalty terms and, of course, requiring clearer disclosures from issuers. The results of Card Hub's Application Study simply provide further evidence that the industry's big boys have gotten the message that they must be straightforward with their customers.

Still, they have a ways to go before you can truly trust that everything you need to know about your credit card will be laid out clearly on the application. So stick with the most transparent issuers and, depending on your exact needs, keep in mind that you might have to hunt a bit to find balance transfer fees and rewards redemption policies on online applications. You don't want any surprises when it comes to your hard-earned money, after all.

>To submit a news tip, email: tips@thestreet.com.

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