Credit cards are certainly the most convenient way to pay for bills and purchases. However, with the interest rates and fees ever increasing, consumers need to be very cautious in choosing their cards. Add to this, they need to be more aware of the exact costs their credit cards impose and their best to avoid unnecessary charges. Let’s discuss the underlying problems associated with credit cards:
Choosing the Right Credit Card
Multiple APR. Some consumers are not aware that their credit card imposes different interest rates for different transactions. For instance, the APR for your balance transfers may be different from the APR applicable to your purchases or cash advance transactions.
This is especially true for credit cards that offer a low introductory rate or 0% APR. The low rate or the 0% APR may either apply for your purchases only or balance transfers only. Before signing up, it is very important to be clear about the exact rates you get for every transaction you make.
The introductory period. Introductory offers may be good for three months, six months or twelve months, depending on your credit card issuer. As a cardholder, you need to be aware of the exact period when the promotion ends. Before signing up, make sure that the regular interest rate will still be reasonable after the introductory period.
Know the consequences of the rewards. Reward programs seemed to be the best thing that happened to credit cards. However, some reward credit cards may actually impose unreasonable fees and very high interest rates. Such costs may offset the value of rewards you can get and you may be better off with a non-rewards card.
Before applying for a reward card, carefully examine the terms and conditions of the reward program. Know the exact rules on how you can earn and redeem your rewards. Know the restrictions that apply to the program.
Cash advance features. Credit cards that allow cash advances may seem like a great thing but watch out! Each time you use your card to take out cash, you are automatically charged with the interest rate and a possible transaction fee. Instead of borrowing cash from your credit card, you may consider other options applicable to your situation.
About the Author
Tara Tiemann is a credit analyst for Go-prepaid.com which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards,prepaid credit cards and prepaid cell phone service can save you big money!