Understanding Credit Card Offers: Are You Reading the Fine Print?

The fine print at the end of a credit card offer letter can tell a consumer a lot more about how good—or bad—the offer is than the main area of the marketing letter, where flashy photos and less text are more likely to catch the eye.

But the small-font text in the last pages of a credit card offer are less likely to be read than the bigger, main points early on. At least that’s what credit card companies are hoping for.

The type of credit card offer you get in the mail tells a lot about what the company thinks of you and how it can best gain your business, according to a research project by the MIT Sloan School of Management.

The researchers studied more than 1 million credit card mailing campaigns and found two types of mailers targeted at different consumers:

• Photos of enticing holiday destinations and reward miles, with the best credit terms, and aimed at highly educated and financially sophisticated people.

• Low teaser rates for an introductory APR (annual percentage rate), more rewards, visual distractions and fine print at the end of the offer letter, all aimed at less educated and less sophisticated customers.

For the less-educated customers, the credit card companies expected them to skip reading the fine print, the researchers found. Those customers were offered cards with complex features and hidden charges, such as higher rates, late fees and overlimit fees after the introductory period ended.

The more educated customers were offered cards that didn’t rely so much on backloaded fees but had higher upfront fees, such as annual fees and higher APRs. The cards have low late fees and over-the-limit fees and are more likely to carry airline reward miles.

Offers with the worst credit terms were more likely to have the terms in small font or on the last pages of the offer letters. The letters with backloaded terms also contained more photos and less text, perhaps to distract from the details of the offer.

Whatever your education status, you can get help choosing the best credit card by comparing the terms in the fine print and carefully reading the Schumer box. This is an area where the relevant terms are put in one place and are supposed to be easy to read.

The marketing material may be best left in the trash, except for the fine print section that usually ends up thrown away first.