In the article I’ll tell you about why it is important to Get Relief by Knowing the Real Costs of Credit Cards. People are always attracted to great deals, especially ones where they can get real value for their money. In today’s economy, what could be more enticing than a new credit card that promises to let you borrow thousands of dollars with a very low monthly payment required? However, letting the attractive offers overshadow the fine print can lead to serious debt.
A credit card is a type of loan that involves fees, including interest on purchases. The overall cost of using a credit card is based on the credit terms and conditions agreed to before the credit card is issued.
These overall costs are collectively known as the annual percentage rate, or APR, and include interest, fees and your credit amount. This amount will give you the actual costs of the credit card.
Because of the various fees you could very well end up paying much more for purchases than store price unless you know how to manage your credit card account properly. Responsible management begins with comparing terms and fees before opening a credit card account.
Prior to signing up for a new credit card, be sure to assess your needs. That way you won’t be paying for services that you don’t really need that can add to the cost. This will also aid you in reaching a reasonable credit limit that will meet your needs but be an amount low enough to comfortably manage without the urge to overspend.
Credit card providers themselves also set credit limits based on a number of factors when you apply. However, just because the provider offers you a high limit doesn’t mean you have to take it. You can ask for a lower limit if that’s what you need to manage your debt.
Also remember that if you exceed your credit limit you’ll be hit with some hefty fees each time you go over. So carefully consider the credit limit before signing on the dotted line.
Never forgo reading the fine print of any credit card offered to you as this is where you’ll find the costs involved. If you already have credit card debt some important features to determine are how long the introductory interest rate lasts if there is one, when and how much the rates will adjust afterward and what fees you will have to pay to transfer balances.
If you have a balance, look for the card with the lowest interest rate and try to get one with an introductory 0% interest rate so that you’ll have the best chance of paying it down. This will help alleviate one of the largest costs of using credit cards for a period of time.
If you’re sure you’ll be able to pay off your bill you have more options available to you. Instead of focusing solely on the interest, you can shop around for a credit card that provides the best rewards and actually get back a little something on purchases.
However, you must weigh how important these rewards are and how much you’re really likely to get back from them since the interest rate could likely be higher for such a card, carry a higher annual fee or add to the terms and conditions.
Think about how you’re going to pay your bills, whether you’ll pay in full every month or on a staggered basis. If the payment method is important to you look for credit cards that offer a number of options, such as when in the month you’ll have to make a payment on your bill and how interest is calculated.
Also pay attention to the grace period and late payment charges. Late payments can cost you hundreds, hurt your credit score and eliminate any intro offers you were given.
Evaluate also if you’re going to just use it for purchases or you’re also planning to use it cash advance feature. Some credit card issuers offer a grace period for purchases but not to cash advances. Also keep in mind that interest fees and charges for cash advances are usually much greater than purchases.
While still in the assessment stage, there are online calculators that you can use in determining the minimum payments including the interest and the length of time it will take you to pay off a purchase if you don’t pay it in full right away. Being able to actually see an approximate monthly cost can help you make an accurate budget for paying down and avoiding debt.
Keep in mind other charges and fees related to credit card use such as returned payment fees, annual fees, purchases made while out of the country, ATM fees and costs for replacing a card. Understanding all these elements will help you better manage your credit card use.
Getting a credit card is easy but you want to consider how it will benefit your life before opening an account. Sure, the convenience is there but the costs are as well and should also be a major factor.