The trend towards using credit cards has been growing at a high rate in recent years. This increased inclination is because of the enormous benefits that credit cards provide the user. If you are planning to get a credit card, then the following are five things that you need to know.
Most of the credit cards come with a yearly fee. This fee depends mainly on the type of the card and the bank. Banks offer a range of credit cards, ranging from premium to standard. Usually, premium cards have a higher annual fee than the others due to the ample number of benefits it offers. Nowadays, banks are coming with newer strategies to attract and expand their customer base. They offer deals like waiving of the annual fee for a transaction of a fixed amount every month. Sometimes, the costs are waived for the third year, or even for a lifetime, provided the user follows the mandates.
Rate of Interest
The transactions done through the credit card possess a particular rate of interest called the Annual Percentage Rate (APR). It depends on the type of card and the profit it offers. Most of the banks permit an interest-free period of about 20 days from the release of the statement. Beyond this date, the bank will add the applicable charges accordingly to the fee.
Least Monthly Expense
A credit card customer has to pay a minimum amount at the end of every month. One can select to pay in parts rather than the entire amount. One important thing to keep in mind here is that every month, the bank will calculate the rate of interest and add it to your outstanding balance.
Rewards and Points
An exciting feature of credit cards is the system of getting cash back and reward points. This cashback can be earned on several purchases and at different merchant stores. Most of the cards work on the plan to award the customer points that you can use on the next purchase or a purchase on a particular category. Starting from groceries to airplane tickets, you can gain cash back and points on almost every type under the sky. Although the extent of benefits on the policies designed by the bank, you can convert the points that you earn into discounts, vouchers, and amazing online shopping deals. Are you are not gaining enough rewards and want to switch to a new credit card and explore new options? Find everything you need on Chase Freedom calendar and rewards explained.
Advance Cash Charges
Just like debit cards, credit cards can let customers make emergency cash withdrawals through an ATM. In the process, there includes a handling charge along with the regular rate of interest. Experts do not recommend this type of transactions as it can lead to high charges, and due to its risky nature.
The points mentioned above are crucial for understanding the basics of credit card working. The cost-saving characteristic of credit cards has attracted a lot of customers. Credit cards, if used properly, can help create a clean credit history and avoid debt.