Credit Card Information plays a very important role in shopping for it. These credit card informations help a consumer to choose the right credit card matching his requirement profile. Fierce competition between the credit card issuing companies force them to offer incentives for their customers in order to allure them to buy their credit card. Hence there are ample chances for a person, novice in this credit card market, to fall prey into this incentive war. Credit card informations play a very important role in helping people to choose the right credit card from the credit jungle.
Credit card is a card which helps a person to purchase something without having to immediately pay for it . This process involves the following steps :-
- The credit card issuing company makes the payment on behalf of the customer.
- The customer in turn remains liable to pay the outstanding amount to the company within a definite period of time, known as Grace Period.
- In case of non-payment of the outstanding amount (full or partial) within the Grace Period, the credit card issuing company charges a monthly interest rate on the outstanding amount from the card-holder. (Rate of Interests may vary from scheme-to-scheme and from company-to-company).
Secured Credit Cards are the real credit card types where the deposit account of the customer acts as the security for the credit card outstanding.
But there is also a variant to this. It is not a typical credit card because here the card issuing company doesn't pay for the consumer. The consumer has to buy the credit card from a company and then has to load it with the required amount of money. Only after that he could use it for further buying but strictly within limit of the loaded money. Prepaid credit cards are especially given by the parents to their minor children. This type of credit card is known as Prepaid credit card.
A very important part of the credit card information is about the interest charges charged by the card issuing companies to the customers.
Interest rates charged by the issuers of the credit card are not homogeneous but are heterogeneous. Broadly they can be grouped under the following heads :-
- Fixed Rate
- Variable Rate
- Tiered Rate
Fixed Rate credit cards charge monthly interest rates which are fixed but it is not ultimate. It may change after a specified time period (generally 6 months to 1 year). After this period the rate of interest generally shoots up. But the card issuing company is liable to give information to its fixed rate customers prior to the rate change.
Variable Rate credit cards are calculated on the basis of certain indexes. Thus with the change of index rate the credit card rate also changes. Some of these indexes are Federal Reserve discount rate, Prime rates, etc. These rates can be verified by having an watch on the index rates published in the business/money section of any newspaper.
Different rate of interests are applied according to the different levels of outstanding amount in the Tiered Rate of credit cards.
The amount of outstanding balance is calculated in different ways and the balance amount varies from calculation to calculation. This consequently affects the financial charges. The different calculation methods are :-
Average Daily Balance Method (including new purchases) = [Summation of the outstanding balance (which includes new purchases during the specified period but excludes credits and payments)of each day in the billing cycle]/(Number of days in the billing cycle).
Average Daily Balance Method (excluding new purchases) = [Summation of the outstanding balance (which excludes new purchases during the specified period and deducts credits and payments)of each day in the billing cycle]/(Number of days in the billing cycle).
Adjusted Balance Method = (Outstanding balance at the beginning of the billing cycle) – (Credits and payments which are made in the specified period of billing)
Previous Balance Method
Here the outstanding amount at the starting point of the billing period of the person is considered.
Credit Card Information, given above, would help the would be card holders in selecting the right card for his right purpose.