Eight Credit Card Tips You Should Know Before Applying
Desmond Primus Today, with are so many different credit card offers available, it can be very confusing to determine which card is the best for you. But before you apply for one, there are eight basic terms and tips you should know to have a better understanding of how credit cards work.
1) Interest rate (APR): The interest, or APR (annual percentage rate) is the yearly interest rate charged on your card. Interest is charged when puchases are made, balance transfers and cash advances. Some credit cards have an introductory low interest rate for example, six months. Then the interest rate will increase after the introductory or "intro" period is over. Some cards will have a fixed interest rate while others will have a variable rate that may occasionally change. Always look at the credit card agreement or "fine print" to determine the type of interest rate being charged. It pays to shop around.
2) Grace period: The grace period is the amount of time you have to pay your credit card bill in full before a finance charge is credited to your account. In most cases, the finance charge or interest is credited to new purchases. Also if the previous month's balance was not paid off, a finance charged is triggered as well. If possible, try to pay your monthly credit card balance in full to avoid financing charges.
3) Annual fee: The Annual fee is charged yearly for the privilege of having a credit card. For example, a card may charge $50.00 per year. Some cards may have lower fees, while others don't have an annual fee. Shop around.
4) Cash advances: A cash Advance allows you to access money from ATM machines, just like a bank ATM card. Any cash advance will be added to your credit card balance. A cash advance fee may be charged on some cards. The finance or interest charged is usually higher than regular item purchases.
5) Late-payment fee: If monthly payment are made after the due date, than you can expect to pay a late fee on top of your monthly payment. Be sure to check your billing statement to find out the due date.
6) Over-limit fee: Over-limit fees are charged if your balance goes over your available credit limit. For example, a card may have a credit limit of $1,000,00. Try to keep the balance down, just in case you need to use your credit card for emergencies.
7) Balance transfers: Some credit card companies will allow you to transfer existing balances from your current card to the new one. They will cut you a check which you can use to pay off the old balance. A balance transfer fee may be charged. The reason most people would want to transfer balances between cards is to obtain a lower interest rate. But before you decide to transfer your balance, call your current credit card company to see it they will lower the interest rate. Companies may be willing to lower the rate if you're a good paying customer. They don't want to lose your business.
8) Disclosures: Disclosures must always be included with any credit card offers. Federal law states that all credit card companies must disclose important information about the card, such as the annual percentage rate (APR), grace period, methods of computing finance charges, annual fees, late fees, etc. Always read the disclosure before applying for a credit card. It's designed to protect you as the consumer. About the Author
Desmond Primus is webmaster of a financial services website and has written several articles on mortgages, credit cards and real estate marketing. For more information, please visit his website! Desmond Primus may be contacted at http://www.FasterPropertySales.com . Click here to view more articles by Desmond Primus. Reprinted with Permission from IdeaMarketers.com
|
