Everybody knows that if credit card is used wisely, it can give many advantages, be convenient help to build good credit history and prove itself useful in emergencies. Nowadays almost everyone in the industry wants to sell you a credit card.
Many credit card issuers send offers by email that advertise favorable credit conditions and low interest rates. Be careful and don’t be fooled by such offers as they are not always fairly presented and may contain hidden terms. How you use your credit cards are primary factors that will determine whether or not you end up in credit card debt.
A credit card should be a convenient means of spending money that you have readily available if needed. It is not a free opportunity to spend money that you don’t have or will borrow from the bank. In the following article we will present some tricks used by credit card companies to fill their pockets and make empty yours.
Bank often send by email offers with “0% APR” written in big bright letters at the top of the offer. Just know that the 0% APR is a marketing technique used by bank to gain new customers. For sure there will be asterisks that refer you to the fine print at the bottom of the offer, where it is explained that best interest rate is only available to clients with the best credit history. In other words, the rate that was used to attract will not be the one you get. Be careful while choosing a credit card just because it seems to be a special offer for you. It may be another trick to gain you as a new client.
It’s so easy to get lured in by numerous sign-up bonuses offered along with new card. You can see a cashback offer or airline miles just for opening an account. But you should be careful. In many cases, you’ll need to charge a certain amount on your card within a specified time period to get such benefits. For example, you should spend $1,000 in purchases to get $100 back or to earn 10,000 airline miles. While the details vary, completing these offers may be difficult or even impossible for your budget. Percentage of cashback may not be all it seems to be either. Notice that you can get cashbacks on your purchases only at certain retailers, not for every purchase you make.
Note that if you get the 0% APR, it can be temporary and you will loose the rate after the introductory term expires. Very often credit card issuers charge non-usage or inactivity fees. Take the time to read the credit card agreement very slowly and carefully then read it again. If you don’t understand something, always ask questions.
Usually several APR are listed in credit card offers. This is a special technique to confuse customers and to make it easier for a credit card provider to defend itself of being suited, since its advertising does not make a specific promise to provide a certain interest rate.
Reduce your credit card limit to only what you can pay off in full each month. Don’t be tempted to increase your limit if the bank offers you such option and stick to what you can afford.
The main purpose of credit card is making a purchase, so borrowing cash via your credit card is much more expensive and will take higher interest rate and a cash advance fee.
Banks usually set the minimum monthly credit card payment at a very low percentage and it seems to be friendly to the consumer. But by making low payments banks increase the cost of the loan and lengthens the time to pay it off. Try to pay more than the minimum repayment as even an extra $50 per month will make a big difference.
We hope that this article will help you as the most important criteria to use when looking for a new credit card is to be aware of the pitfalls. Then you can use your knowledge to plan your finances wisely.