Some interesting facts about credit cards
May 19, 2010 by admin
Getting trapped in credit card debts is mostly due to lack of control and lack of knowledge about how credit cards work. This is why we will provide you with all the necessary information you need to be able to use your credit card properly.
Eligibility Requirements
Credit cards can be obtained by any person who is currently employed or manages his own business. Approval would depend on credit worthiness and company discretion. Unemployed individuals (such as students and stay at home parents) can still get a supplementary card through a family member who is an existing cardholder.
Which Credit Card Company to Apply for?
When scouting for credit card companies, it is essential for a person to always look for the best deals being offered. Many would entice you with very good initial offers (teasers) and would then trap you into paying skyrocketing fees after just a few months of membership. Sign up with a company that gives you the lowest APR (annual percentage rate). A 7% APR is already considered low, considering that others can go as high as 13% or more.
If you already have an existing credit card and found out that you are being charged more than you should, in terms of fees and interest rates, you need to talk with your credit card company and persuade them to give you a better rate. If not, you can always resort to balance transfer schemes with other companies.
How Are Monthly Payments Calculated?
Your account balance is calculated by dividing the minimum due per month with the total amount due. For example, if the total due is $1,000 and the minimum monthly percentage is at 2%, then the minimum amount you need to pay every month is $20. The computation can be affected by other charges such as a late fee or a finance charge. If you do not pay your total amount due every month, your balance would keep on going up because of the interest.
Aside from those mentioned above, there also other factors that are considered very important. These are:
Transaction Fees and Other Charges
Cash advances, late fees, exceeding credit limits, among others are what could add up to your credit card debt. On average, Americans are paying $32.95 in late fees, and some of them have to deal with up to 41% increase in their interest rates, as imposed by their credit card company because of paying late.
Grace Period
This is the set time between the end of your billing cycle and the date when your payment is due. Depending on which credit card company you sign up for, the grace period is between 20 to 25 days. After your grace period ends, you will pay interest if the total amount due has not been paid.