Don’t you feel on cloud 9 when you swipe that golden plastic beauty and Voila- the world is at your feet? When you conquer the scattered happiness with your credit card, less are you aware about the trap that you are getting yourself into.
I bet most of you don’t bother checking anything before a credit card application apart from it being “lifetime free”. And well, it won’t be wrong to say that it’s a new generation trend.
To be precise- this carefree, laid-back attitude can suck you up in a horrible snare my friend!
Here are 10 things you don’t consider- but as a matter of fact you should- before saying “Yes” to your credit card representative.
1. Credit card is never free
The most commonly used pitch by a Credit card agent is, “it’s a lifetime free card“. True, but there are only few cards which do not have annual fee associated with it, and that doesn’t mean there won’t be any interest or charges (like service charge, transaction charge and many others) as well.
2. The interest rate differs for each applicant
I bet you didn’t know that every credit card applicant doesn’t get charged by the same interest rate. In adherence to your annual earnings, job type and credit score – the rate of interest offered differs for each credit card.
3. Multiple options for credit cards
There are hundreds of different types of credit cards available, which are tailored from the user perspective. Some of them are student credit cards, rewards card, travel rewards credit cards and several more. So, don’t rush in and go for the first one that you come across. Research!
4. Check the grace period
Grace period or the interest-free period is the biggest perk offered with any credit card. But it is not the same for every card. Be skeptical enough to cross check the exact grace period and go through the terms & conditions properly.
5. Late payment fee
No one really tells you about the late payment fee in case you miss on a bill payment even by a day. All they tell you about is the sugar- coated facts about the interest-free period that comes along with the card. (My advice- Don’t fall for it and check everything minutely).
6. Cash withdrawal from a credit card
A whooping amount of interest is charged on cash advances from a credit card. In addition to the interest, there’s also a cash withdrawal fee charged. Whatever you do, and whichever way you wish to use your magic card- avoid proceeding with the stunt of taking out cash from it.
7. Balance transfer
Are you aware that you can transfer an outstanding amount from one credit card to another card? Maybe yes, maybe no. but, this facility is not available on all credit cards. One more thing to consider before any random card applications, Si?
8. Your employment affects the application
The company that you work for, plays a critical role in your card application. Not only it determines the interest rate but also the limit of the credit card offered to you. So, choose your employer carefully and stick to big brands if you wish to have a higher limit.
9. Credit card affects your credit score
Your credit card usage has a major role in determining your credit score. Your future financial undertakings depend a lot on your credit score and you have to be wise while using your card if you wish to keep it high. All the financial product related ads nowadays are talking about it. They let you check your credit score in exchange of your personal details **no free lunches after all**.
10. Minimum balance- Don’t fall for it
As tempting it may sound, but paying the minimum balance might save you some salary for a while but not in the long run. It creates a swirl of interest combined with the outstanding balance – which creates a never ending cycle of repayment. Beware! And pay the entire amount each month to keep yourself safe from the debt trap!
Now that you have been enlightened- take a deep breath and think wisely before you pick your personal tempting card from an array of Credit cards available.
It might be boring (*definitely is BORING as HELL) to read the terms &conditions- but you should, as it save you from future financial disasters. And on that note Amigo’s, “Happy spending!!”