Do you know anyone who doesn't have a mailbox overflowing with
credit card offers? Open any of them up and you'll find in
large print just what makes this card perfect for you. At first
glance, this all looks good on paper, but it's the small print
that you don't pay attention to that will come back and bite
you in the end. All credit cards offer a variety of features.
Knowing and understanding these features will help you to
decide which card is right for you.
Fees
Most credit cards charge fees for various things, and it is
important to know what these fees are and how to avoid them.
The annual fee
Some credit card companies charge you an annual fee just for
using their card. Because of stiff competition, you can often
negotiate this fee away if you call and speak to a customer
service representative.
Cash Advance Fee
Most credit card companies will charge you a fee for cash
advances. These fees can vary but are usually somewhat hefty.
Not only will they charge you a one-time fee, but the interest
rate for this money will be at a considerably higher rate.
Plus, unlike a regular purchase, where interest begins accruing
after some grace period passes, cash advances accrue interest
charges from day one.
Many card companies are competing for your business and are now
offering an introductory cash advance and balance transfer rates
for a specific amount of time. This lower rate can be applied to
any balances you may wish to transfer from another card.
Although it sounds good, some companies will charge you a fee
for the transfer. Know what the fee is before you transfer any
balances.
Miscellaneous Fees
Things like late-payment fees, over-the-credit-limit fees,
set-up fees, and return-item fees are all quite common these
days and can represent a serious amount of money out of your
pocket if you get whacked for any of these fees.
Incentives
Since there are so many credit card companies, competition is
stiff. Adding incentives to their offers is one of the more
popular ways to tip the scales in their favor. Incentives like
rebates on purchases, frequent flyer miles on certain airlines,
and extended warranties on purchases are just a few of the
bonuses that card companies will now offer.
For those of you who collect and use your frequent flyer miles,
they also have added incentives like travel insurance and car
rental insurance for your convenience. Of course, they are
hoping that with all this traveling, you are using their card
to foot at least some of the bill.
Rewards
Many card companies are looking to keep your business and are
therefore making it worth your while to use their card. Just
simply by using their card you can accumulate points that will
in turn earn you rewards. What kind of reward depends solely on
the amount of points you accumulate. Since you can't accumulate
these points without charging things on your card, this is a
classic case of 'you have to spend money to save money'.
Bottom line is this: Know what you need and what you don't. No
sense in paying for any features that you won't use.
About The Author: Keith Baxter made it his mission after
college to educate as many people as possible to the advantages
and disadvantages of credit through a widespread re-education
initiative. You can find out more about Keith and what he's up
to at http://www.bankcreditcardlist.com
