Credit Card Catches
It is a golden rule, that whenever you are about to sign up for a credit card, you always read carefully through the fine print, in order to avoid the eventual "surprise" fees. But unfortunately, most of the individuals when faced with too good to be true credit cards (and especially with convenient credit limits and low interest credit cards), do not accord enough attention to thoroughly studying all the information related to the offer.
Many times, credit card catches and traps are either too obvious and that's why these aren't considered as catches, or hidden on the fine print by being printed in outrageously small letters at the bottom of the page, on the sides and many other places which aren't in prime sight. Among the most usual credit card fees which are applicable, and which definitely add a good deal to your initial loan amount, are the following:
- The APR -first and most important aspect of a credit offer in general. The higher the interest rate applicable, the greater the overall cost of the loan. Actually, it is good to choose an APR below or equal to 10.99% if possible.
- A credit card which comes with unusual low interest rates, will most of the times require a high annual fee, and other extra charges. So, don't neglect this aspect as well. Depending on the type of the credit card, its terms and conditions, this annual fee can reach even values over $50
- Introductory APR- as its name suggests is applicable only for the introductory period of 6 or 12 months, as specified in the offer. Moreover, when activating transactions like ATM withdrawals, it is another interest value that will be applied. That is why it is good to always check the monthly detailed balance and keep an eye on transactions and track the applicable interest payments for different activities. This way you will know what to stay away from.
- When you are about to choose a credit card, you also would like to choose one that offers fixed rates. But bear in mind that fixed rates are fixed only as long as you keep within the boundaries of your credit limit. For example where you have a credit of $1,000 with a fixed interest of say 10.99%, if you step over this limit with $50 the interest payable can jump to outrageously high values.
- Also, check in the fine print to see what the grace period is. This way you will be able to organize better your financial status, and you will always know exactly when you should pay off your balance, so that you will not be charged interest on interest (or interest on total debt)
- Late fees and charges. This is yet another topic of interest related to credit cards, because by being late with even one payment, you will be penalized. So, check that penalty fees are not that high when reading the fine print which comes with the offer, and try to avoid coming to that situation.
All in all a credit card is good and useful only if it is managed properly and responsibly. Shopping around, making hazardous use of your card can really lead you to a vicious circle you won't be able to get out of. There are two top rules you should keep yourself to: keep up with the minimum payment always, and don't step over your credit limit no matter what, because credit card debt is the worst type of debt.
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