The Underlying Problem In Credit Cards

The Underlying Problem In Credit Cards


There's no arguing about it, credit cards provide ease and convenience for its holders. But today, debt problems resulting from credit card use seem to grow by the minute. Surveys prove that compared to the past years, credit card companies today have been imposing interest rates and other costs that are sometimes way too much than what they should be charging. As a credit card holder, how should these changes affect you?

Whether you already own a credit card or is still planning on getting one, being aware of the true costs associated with your card is definitely your best defense against unreasonable charges. Are you really aware of what exact fess your card charges you every month? What are the factors that you should check on in choosing the right card for you? Let's discuss some of the possible problems that you should know about your credit card.

Choosing the Right Credit Card

Multiple APR. Some credit cards have more than one APR that may apply to varying credit card transactions. Don't immediately assume that the low APR offered for your balance transfers will be the same as the rate that applies to the purchases you will charge to your card.

Take note that if you use a low APR or a zero APR balance transfer credit card on your shopping, you could be charged with an expensive APR on these purchases. Thus, examine carefully how much APR will apply to your balance transfers, purchases, and cash advances.

The introductory period. Introductory offers usually last about 3 to six months while some credit cards may extend their promo rates for up to a year or more. The important thing is that you know exactly how long the low interest rate will last and how you can make the most of that given period.

For instance, if you're getting a balance transfer credit card with a 6-month introductory offer, make sure that you'll be able to pay off all the balances you transferred within that period to avoid incurring the regular interest rates of the card. Consequently, find a credit card that will maintain reasonable rates even after the introductory period expires.

Know the consequences of the rewards. You may easily get enticed by the ads promising to give you freebies, rebates and other bonuses from your credit card purchases. But watch out about the consequences that may come with rewards credit cards.

For example, how much is the APR you'll pay if you carry over your balance from month to month? How much is the annual fee on that card? How much are the penalty charges if you delay your payment? Will the interest rate, annual fee, and penalty costs offset the value of rewards you can get? What happens if you make even just one late payment? Will your chance to earn rewards be forfeited? Don't just take a look at the rewards being offered, understand carefully how the reward program works and the fees that come with it.