Credit cards: Facts you should keep in mind when using them

A credit card is a small plastic card issued to you for making non-cash payments for goods and services. Companies that issue a credit card to you offer you a credit limit on one when you make purchases. Your monthly payments range from a minimum amount to your total outstanding balance. Your credit card is issued by banks, trust companies, credit unions, financial institutions, finance companies and department stores.

7 Facts you should remember while using a credit card

You can use your credit card well if you understand key features that can help you maximize your credit benefits. Some of these features are as follows:

  1. The APR: Know your credit card’s annual percentage rates (APRs) and whether these rates are fixed or variable. These APRs are annual charges that you pay as interest fees for an entire year.

  2. Balance transfer fees: You pay off credit card debt through balance transfer by lowering your payment rates on your credit balance by shifting debt from cards with a higher interest to cards with a lower interest. But credit cards always have a promotional period when you get 0% or very low rates for the first few months. Once these months are over, your rates are adjusted to higher figures and you pay a certain fee for owning a balance transfer card. This is undesirable, expensive and problematic.

  3. Know your credit limit: Find out what is the total credit limit on your credit card. It helps you understand the maximum you can pay with your credit card.

  4. Minimum payment options: Know your minimum payment options for your credit card. Minimum payments are the minimum monthly payments you pay on your outstanding balance every month and they decrease as your balance is paid off.

  5. Late fees: When you miss a credit card payment for a month, you always pay a late fee or an over-limit fee. Remember to know the specific of such payment before you choose a credit card.

  6. Rewards on your cards: Most credit cards give you certain perks like frequent flier miles that you accumulate with every purchase. Know the details of such benefits before you choose a credit card.

  7. Grace periods for late payments: Always remember to check the period of time your credit card company gives you before you start accruing interest on delayed payments every month.

5 Solutions to your credit card problems

5 solutions to your credit card problems are listed below:

  1. Be alert: In case your credit card is stolen you are held liable for unauthorized purchases if you forget to report the loss to your creditor. All card issuers offer you personalized and free alerts on your phone and your email. Make sure you subscribe to these alerts to keep track of your credit balances, payment dates, payment history and purchase activities.

  2. Claim your rights: Sometimes unauthorized charges and billing errors cause a headache at the end of every month. You have the right to dispute purchases which you have not paid for but are accounted in your monthly credit card statement. The zero liability clauses offers you the benefit of reporting fraudulent purchases which you have not paid for.

  3. Be careful with personal information: There is a high chance of fraud or loss of sensitive personal information when you use your credit cards too much. Be careful when sharing personal details card companies. You might unwittingly leak personal information to thieves and swindlers if you lose credit cards. Notify your card issuer as soon as possible and cancel your card even if you retrieve it.

  4. Write out your debts: Sometimes your monthly interests on your purchases increase on credit card debt. Write out a list of everything you owe. Many of us don’t even know how much we have taken as loans. It’s always a good option to write down the lender’s name on a loan, the amount you owe, the terms of the loan and the interest rate and fees.

  5. Cut on spending: When you have many credit cards, each having a different credit limit, you add up all the credit limits that run into thousands of dollars. Your income may not be enough for you to sustain many balances. Do not use too many credit cards at one time and cut spending if you want to get into the fast track of cutting out debts.

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