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Opting For A Credit Card? Check Out Certain Terms
You've just received a "pre-approved" credit card offer in
your mail. Without wasting a minute you're ready to accept it,
especially if it's the "before-the-offer-expires" one. Wait!
Don't be in a hurry. Shop around a little and then make your
decision about that credit card.
Do you know that these "pre-approved" offers that pop up
almost every time you open your mail are just gimmicks? Actually,
the approval of your credit card depends on your formal
application. If it fails to meet the criteria, you may be either
denied the credit card or offered a higher interest rate on it.
Moreover, don't be in the illusion that just because your credit
card is pre-approved, it'll be compatible to your spending
habits. Credit card basically means that you're borrowing money
by paying some charges. So, it's essential to understand the
terms and conditions of the credit card before accepting it.
Every credit card applier should be aware of certain terms
before opting for that valuable plastic asset. Are you aware of
them? If not, then read on?
Annual Percentage Rate (APR): It's the measure of the credit
cost that is charged annually. Before opening your credit card
account, you should be familiar with the APR. In addition, some
credit card issuers may change your APR with the change in
interest rates or other economic indicators. Programs allowing
such change are called "variable rate" programs.
Free Period or Grace Period: Always find out whether your
credit card gives you a free period lest you may be deprived of
the benefit of avoiding finance charges on full payment before
the due date. If your credit card offers a grace period, you
should receive your bill 14 days prior to the due date, so that
you get sufficient time to make the payments.
Annual Fees, Transaction Fees and other charges: It's vital to
have knowledge about the annual and transaction fees charged by
the credit card issuer. Besides this, you may also be charged in
case of a cash advance, a late payment, or exceeding your credit
limit. Sometimes, you've to pay a monthly fee even if you don't
use your credit card.
The Bonus Program: If you're opting for a credit card that
offers attractions like airline miles, merchandise, or cash back,
check out whether there are any participation charges linked with
them. If you think you won't get a chance to use these bonuses
due to your lifestyle, then it's better to avoid such credit
cards.
Zero percent financing: If you hold several credit cards, then
a credit card with an initial 0 percent balance transfer rate
would save you hundreds of dollars in the first year. However,
such transfers may come with some charges. Check them out.
Credit card terms differ with the issuers. You should know how
you'd use your credit card. For instance, if you are going to pay
your full balance each month, then you should concentrate on
annual fee and other charges rather than the periodic rate and
the APR.
Moreover, you should know your credit card limit too. Also,
find out how popular the credit card is and what are the features
and programs of the credit card you've opted for.
Once you are well versed with the terms of the credit card,
just apply for it!
James Marriott is a finance writer with more than 15 years of
experience in writing financial content, including those related
to credit cards, mortgages, stocks, investments, and funds. He
has been with RNCOS, a premier financial writing services
company, for 2 years as head of financial writing. He is also a
regular financial columnist with renowned business journals. For
your comments on the article and further financial assistance,
please contact our staff writer at info@rncos.com.
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