This credit card from the LinuxFund seems like a good idea. You and I would certainly like to support open source projects like Linux and KDE and so on. Each purchase on this credit card results in a donation to a worthy open source cause, and you can send all of your cash-back rewards back as donations as well.
However, this turns out to be a lesson in reading the fine print. This card has some very ominous conditions, which they don’t tell you except in the fine print:
- The rate is not fixed, but variable: that means it can go up and down over time, with no changes in the terms.
- The terms (including APR, fees, and conditions) may be changed at any time and without notice to you.
- The default rate is (approximately) 12% over prime up to 21% over prime.
- Cash advances are 24% over prime.
- If you miss a payment by more than 15 days, your rate will skyrocket to 32% over prime.
- If you miss a payment by more than 5 days twice in a year, your rate will skyrocket to 32% over prime.
- If you miss any payment on any card you own they will raise your rate.
As you can see, there are a number of gotcha! features to this card. However, it is not alone. Here are some ways to avoid the gotchas:
- Is the advertized rate an introductory rate? When does it expire?
- What is the rate for purchases?
- What is the rate for cash advances?
- Are there any other rates?
- Are the rates fixed or variable?
- Is there a grace period? What happens if you miss a payment?
- Are the rates dependent on other cards?
It has been said that consumer credit is the riskiest form of credit, and the terms on most cards suggest that the credit card companies think so. Read the fine print carefully!