| |
Managing Credit Cards Effectively
By Ethan Hunter
Credit cards are almost a necessity in today's society. It
has become harder and harder to get through life without
plastic. If you want to make purchases over the Internet,
guarantee a hotel room, or perform a wide variety of other
financial transactions, a credit card is essential. And, the
truth is, credit cards can be a valuable financial tool,
provided you manage them effectively.
All credit cards are definitely not created equally and the
first step to effective credit card management is shopping
around for the right card in the first place. The factors to
take into consideration are interest rates, annual fees,
other fees, grace periods and aspects like cash back or
other rewards for using the card.
Interest Rates
One of the incentives credit card companies use to try to
get customers to choose their card over all the others
floating around is to offer a special introductory interest
rate. An introductory rate sounds good, but can be a trap
for the unwary. Generally, the customer opts for the low
introductory rate, runs up the charges on the card, and is
not able to pay the card off by the end of the introductory
period. That's when the 'after-introductory' rate kicks in,
and you find yourself paying from 12-20% on your credit
card debt. When you are interest rate shopping, you also
need to make sure that the interest rate won't take a
substantial jump if you are late with a payment. Some
companies bump the interest rate if your payment is even a
day late, and the change is permanent. You don't ever go
back to the lower rate.
Fees
Be sure to read the fine print. Credit card issuers have
gotten fairly ingenious about hiding a variety of fees that
the casual consumer, who doesn't bother to read all of the
credit card details, may end up paying and not even be
aware. Annual fees are fairly straightforward. There are
cards that charge annual fees just for the privilege of
carrying the card, and there are others that don't charge
annual fees at all. An annual fee is not necessarily bad,
depending on the perks that go along with it. If there are
none, don't bother with cards that charge an annual fee.
On the other hand, if you have no credit history or a bad
credit history, you may have to get a card with an annual
fee, and use it until you can qualify for a different one. In
most cases the annual fee can be rolled into the monthly
payments and doesn't have to be paid up front, although
that is not always the case.
Watch out for hidden fees like closure fees. Some
companies actually charge you for closing your account.
The only way to avoid closure fees are to carefully read all
of the credit card's terms and conditions before accepting it
and make sure that no such fee is attached.
Late fees can be charged when your payment is late,
sometimes even as little as one day late. These fees can
vary, but again are disclosed in the credit card terms, so at
least you are aware and can avoid them by keeping your
payments current.
If you travel, beware of overseas transaction fees. Some
card issuers have begun to charge a 1-2% fee off the top
for using the credit card overseas.
Grace Periods
If you plan on paying off your balance in full each month to
avoid incurring any interest fees, make sure your card has a
grace period that allows you to do so. Some cards begin
charging interest at the time of purchase. In that case,
even if you pay off your balance every month, you will still
end up paying interest to the credit card company. Make
sure there is a grace period on your card - that's the
amount of time you have before you start incurring interest
charges and it's usually something like 25-30 days. Be sure
to read the card disclosures carefully so you will know if
there is a grace period during which you pay no interest, or
not. If you don't pay off the balance of your account each
month, grace periods really don't make too much difference
because you will be paying interest anyway.
Other Benefits
Some credit cards offer additional benefits for using their
card - things like airline miles or a percentage of cash back
on all your purchases. If you travel a great deal or routinely
use your credit card for all purchases and then pay them off
before the end of the month, these can be valuable
additions. However, be sure to read all of the fine print and
make sure the perks aren't costing you more in fees and
interest than they are worth.
If you can't get by without a credit card, and very few of us
can in this day and age, at least be aware of all the
different types of offers that exist and choose the one that
will benefit you most in the long run.
About the Author
Ethan Hunter is the author of many credit related articles. If you are looking for help with Payday loan or any type of faxless loans please visit us at http://www.PaydayLoanChoice.com
Article Source: http://www.simplysearch4it.com/article/10050.html
| If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/10050.html" as shown above and make it hyperlinked. |
| Some other articles by Ethan Hunter | |
| |
|
