DEFINITION of 'Upfront Pricing'

The interest rates and fees stated in a credit card agreement when the card is issued. Upfront pricing lets a consumer know what the interest rate will be for purchases when carrying a balance, the fee for not making the minimum payment on time, the charge for transferring a balance and the annual fee (if any). Upfront pricing also lays out foreign transaction fees, returned payment fees, the cash advance APR, the minimum interest charge and other costs the consumer could incur as a cardholder.

BREAKING DOWN 'Upfront Pricing'

You can see a credit card’s upfront pricing before you even apply. At the credit card issuer’s website, look for a link to “pricing and terms,” “pricing information” or “rates, rewards and other info.” After the 2009 Credit CARD Act became effective, credit card agreements became simpler and upfront pricing became clearer. We don’t know how much of these change is specifically because of the act. While the act required many changes to how credit card issuers advertise to and communicate with consumers and limited certain fees and the conditions under which credit card issuers can increase interest rates, it did not specifically require credit card agreements and upfront pricing to be presented in a certain way. The CARD act does not cover business credit cards, only consumer credit cards.

Credit card issuers can change the rates and fees disclosed in upfront pricing if they follow the rules of the CARD Act. The issuer must give the cardholder at least 45 days’ advance notice of any changes, and consumers who disagree with certain changes are allowed to close their accounts and pay off their existing balances under their existing terms. Issuers also can’t increase the card’s upfront interest rate for new transactions until the consumer has held the card for at least a year. Upfront pricing does disclose the penalty APR and when consumers will have to pay it, and it also discloses whether a credit card’s APR is variable, what the variable rate is based on and when it might change. If a consumer pays his credit card bill late or if market interest rates increase, the credit card issuer may increase the consumer’s interest rate.

  1. Credit Card

    A card issued by a financial company giving the holder an option ...
  2. Universal Default

    A practice whereby a credit card issuer increases a credit card ...
  3. National Issuers

    Credit card companies that give credit cards to creditworthy ...
  4. Late Fee

    A charge a consumer pays for making a required minimum payment ...
  5. Credit Card Balance

    The amount of charges, or lack thereof, owed to the credit card ...
  6. Opt Out Right

    A consumer’s authority under the 2009 Credit CARD Act to disagree ...
Related Articles
  1. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  2. Personal Finance

    Terrible Credit Score? Try These Credit Cards

    When your credit is less than stellar you have fewer choices. But some are still better than others. Here's our read on which cards to get.
  3. Personal Finance

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  4. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are 5 times you shouldn't pay with a credit card – and 5 times you should.
  5. Investing

    Investing In Credit Card Companies

    This investment requires keeping an eye on consumer indexes and the overall health of the economy.
  6. Personal Finance

    Best Credit Card Features For Students

    Students should look for credit cards that charge no annual fees, have a low introductory interest rate and offer rewards or money.
  7. Personal Finance

    Credit Card Debt: America’s Biggest Struggle?

    Dealing with credit card debt is a huge struggle for many American families. Here are some tips to get you started.
  1. What are some common models that practitioners use in quantitative analysis of equity ...

    Understand which aspects of a credit card agreement make accepting a new credit card offer a good deal or one that should ... Read Answer >>
  2. How can I avoid paying unnecessary credit card fees?

    Examine different strategies for reducing fees on credit cards. Learn about the Consumer Financial Protection Bureau and ... Read Answer >>
Trading Center