Credit cards have become inseparable entities of our daily lives. From the morning milk to the evening shopping everything is now done with the help of a credit card. This not only helps in paying for your expenses together but is also a great way of managing your finances.
No matter how long you have been using the credit card, there are some unheard secrets that one must know about the credit card.
7 Secrets Must Know About Credit Card
- Fixed rates are not fixed: No matter how much your banks tell you that the interest rate being charged on your credit card is fixed, it is not true. This can raise the issue with your APR. Normally, you sign on with a fixed introductory interest rate that may change at the company’s will. But if the rate increases then it is your right to be notified 15 days before. So, keep a check on your mail to ensure you do not avoid any such information.
- One late payment leads to two penalties: Normally the credit companies make us believe that one late payment equals one penalty fee and on-time payments equal zero fee. That is not the truth. Sometimes they can penalize you with two surcharges on one delinquency, and you won’t know about them until you’ve been charged.
- Twice the interest in one month: Credit card companies can impose two months interest for just one month of late balance payments. It’s not the interest that makes this a problem, but the principle of being punished for good financial behaviour.
- No card limits – just with limits: If you have a card with a no-limit then you must know that this could be a trap, especially if the lender is not trustworthy. The card is set at a no preset limit, based on your month-to-month spending behaviour and habits.
- Minimum payments to the maximum: In the case of credit cards, the longer you stay in debt, the more interest credit card companies can charge, and the more money they make. With smaller repayment requirements, we’re prone to spend more and accrue more debt each month.
- The grace period is a facade: Grace periods are the period to users where they can make a large purchase and pay a portion of it promptly to avoid interest rate. This too is changing as the card issuers are reducing the grace period to just 20 days. Be sure to check before you get a credit card.
- Late payments can raise your APR: Always make timely payment of your debt. Late or partial payment of your credit card can jack up your total APR across each line of credit in your name.
These are some points which the credit card issuers will not acquaint you with, but are helpful if you are using a credit card. Make sure that you check these points in the terms and conditions before applying for a credit card. You can also check with your issuer about these terms or any conditions being offered to you with the credit card.