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Legal jargon and convoluted language, sometimes called 'bureaucratic English' or 'civil service-speak', is everywhere in the financial industry. Try this from former US Federal Reserve chairman, Alan Greenspan: "I know you believe you understand what you think I said, but I am not sure you realise that what you heard is not what I meant." Recently, Stephen Richards, a 'longevity risk consultant' (a what?), topped even that. He said: "In simple statistical terms, the mortality experience of a given portfolio [of lives to be assured] can only ever be used to provide an estimate of the underlying mortality." Except for amusing quotes like that, The Fool doesn't like long-winded phraseology. It certainly isn't amusing when you have to read it in the small print of a contract (or the terms and conditions). The worst part is when you spend ages poring over every line of small print to find there's just a single clause near the end that ruins the contract for you. However, you can save time by identifying the key clauses and reading these first. Here's what to look for... Credit cards Card companies will make a big thing of any promotions, like 0% deals, so you won't need to look hard for those. To find the other important details quickly, look in the terms and conditions for the box that neatly summarises key features: a Summary Box in fact. (Sometimes it's in a separate document to the terms and conditions.) Here you'll see the interest rates they charge on purchases, cash advances (or cash transactions), balance transfers and the dreaded credit card cheques. The Summary Box will also tell you if there are annual fees or extra charges. Many of you will be particularly concerned with the balance transfer fee (2% is normal on balance transfer cards that have 0% interest) and the cash advance fee. (2.5% is normal, so I wouldn't use credit cards to get cash out!) You might also want to check to see if the card provider has followed the Office of Fair Trading's guidance on late payment fees by reducing them to £12. The main questions you want answered are: Loans With loans it can be hard to get a full copy of the contract before handing over your details to the provider. However, there are five key questions that pretty much anyone will want answered before they bother to fill in forms: The 1st, 2nd and 5th questions will probably be obvious when you look at the sales literature or get a quote. If they haven't told you the total amount repayable (TAR), i.e. the total loan plus interest, you should ask them. The TAR is better than the Annual Percentage Rate (APR - the interest rate), because the APR can be calculated in different ways. This means that a lower APR may actually cost you more, so it's misleading. If you're going for one of the best rate unsecured loans, you can safely assume that you'll pay a penalty for early settlement. If not, you'll need to scan the contract for reference to it. Mortgages This is the big one! No one wants to mess up on the small print for their own home. The best shortcut is to give a list of questions to potential providers. The questions everyone will want to ask are: Some of you may want to add other questions. For example, if you're not planning to Foolishly switch your mortgage every few years for a better deal (you really should!), you may want an indication of what their rates will be after the initial period. Therefore, some more questions you might like to add are: Savings accounts The first thing you want to establish is the interest rate. Look for the Annual Equivalent Rate (AER), not the gross rate, as it provides a more accurate reflection of the interest you'll receive in a year, and all providers are obliged to display it. Skim the contract for answers to these questions: You may be able to get most of this information from the provider's website without poring through the contract. However, you should still skim the small print for the withdrawal details. In particular, you want to know what'll happen to future interest payments when you make a withdrawal. For example, some savings accounts allow unlimited withdrawals, but they don't pay you interest for any months in which you withdraw money. They may even stop interest for two months. Last words on small print If you know your statutory rights (legal rights when shopping) and you're pretty familiar with the Data Protection Act, you might feel comfortable skimming or skipping these sections in a contract. You may also feel happy to skip the definitions section, and come back to it only if you need to. If you don't take out rip-off payment protection insurance with the product, you can ignore the sections on insurance too. Nothing replaces reading the small print, but these tips should save you time when you're sorting the wheat from naff. If you scan for the key things first, you'll save a lot of time and bother. If you have lots of questions, just write a quick email to the seller. Let them translate the bureaucratic English for you. > In our financial comparison centres, we make the small print nice and clear, like this: Juxtapose vehicles designed to ameliorate your fiduciary topography!
Translation: "You've misunderstood me."
Translation: "We don't know when people are going to die." Never!
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