One common mistake people do while buying credit cards is the lack of research and understanding about the finance world and the credit card policies. Evaluate the annual fees, the interest rates, and other underlying terms and conditions of the plans. Below are some of the chief reasons why people get fascinated with credit cards:
- Balance Transfers
With increasing awareness about credit cards, banks have started employing different strategies to increase their target audience. A particular category of credit cards allows you to transfer the whole credit card balance to that account. It helps to combine your debt. A processing fee for your transaction is charged, which is merely a less amount. These types of credit cards possess an interest-free period, ranging from 6 months to a year. After the interest-free period, standard charges on the cash advances and transactions are applicable.
- Credit Scores
Credit scores are the reward points you have earned based on the purchases you have done through your credit card. It shows how well you can manage your debt. A bank will scrutinize your spending patterns, payment amounts, records of late or over-limit fees, history of regular payments, and loan premiums, among the other factors. An advanced credit score will enable you to get faster approval for a loan application or even for a different type of credit card.
- Air Mile Points
Certain banks present the user with specific features which sure attracts the customers and pushes them to do the transaction from their credit cards. One example of this is air mile points. Users can earn Air mile points by converting their earned reward points. That is mostly applicable to premium cards and thus have a high annual fee. If you buy a premium credit card, you can always save the air miles and then avail it by offsetting a vacation to an exotic tourist place.
- Minimum Monthly Payments
A credit card user gets the benefit of paying a relatively less percentage of what he owes, every month before the payment due date. You can pay this amount, and the remaining will be carried forward to the next bill with a meager rate of interest. That applies to all kinds of dealings, including cash advances, shopping bills, pending premiums, over-limit fees, and so on. To know more about the best credit cards to choose from, visit PFA editor review.
Apart from the benefits and crucial features of the credit cards, there are charges that you are obliged to pay for if you don’t pay the premiums on time. Some of the most common fees are:
- Late Payment Charges
You ought to pay the minimum fixed amount at the end of every month. If you fail to follow this, banks will levy a late payment fee. This fee differs from bank to bank.
- Over-Limit Fees
After the credit limit allocated to your card gets exhausted, the over-limit fees come into play.
Using a credit card has become a widespread phenomenon. It helps to balance your financial life if wisely used. Understanding the main factors will help you to take the best advantage of credit cards.