So many consumers get caught in the tricks of big credit card companies. Short term deals seem like a great opportunity. Few know that there are large fees, hidden charges, and increased interest rates lurking around the corner. They are just waiting to pounce like a lion on a gazelle.
Rule #1 isn’t first on the list just by coincidence. It is a rule that will save you money and keep you out of detrimental financial situations, especially when it comes to credit cards.
And just like Rule 4 states; don’t abuse credit, but don’t fear it either.
Don’t apply for your next card blindly. Look through the circus acts and find the card that will benefit you. Here is what you should look for:
Characteristics of a Bad Credit Card
Interest Rates
This should be the first thing that you review when choosing which credit card to apply for.
Trick 1– credit card companies offer a introductory interest rate for a certain time period that makes it seem like such a good deal. Once that period is over, your interest rate will increase substantially.
Trick 2– they offer no interest for so many month. They expect you to rack up a large balance. Put your payments on auto pay and think that you are paying down your balance each month with no problem. You are all of a sudden smacked with interest on your high balance.
Make sure to know the exact interest rate. If it is fixed or variable. How long that interest rate will last.
Annual Fees
This is something to definitely pay attention too. Sometimes that annual fee can be almost the same amount as your credit limit on the card. especially for department store credit cards.
Trick– No annual fee for the first year. Many credit card companies are offering this because they know their card holders will forget all about it. That is until they get hit with the huge annual fee the second year.
Some cards can be worth the annual fee if it is low enough and the rewards are beneficial. But some cards charge an annual fee that is hundreds of dollars. They are not worth it.
Rewards Programs That Actually Reward You
A lot of credit cards offer rewards, but they don’t help you out at all. Some also only offer them on certain purchases for a certain time.
Find a card that offers that accommodates your life style. There are many cards that offer rewards on all purchases. Cards that offer cash back on all purchases is a major plus. It is a great way to take advantage of your credit cards.
Many rewards programs are a gimmick to make you feel like using the card is worth your time. But they will hide the details about the rewards programs. Some cards will only let you put those points towards their affiliates, not even giving you the opportunity to cash out your points for things you need to use them for.
Know the Details
Credit card companies like to hide a lot of information in the fine print. They put the good stuff in big bold letters on the front page. But the things they want you to skip over and forget about they put deep inside the paperwork and in tiny print.
Why? Well for one, most consumers don’t know they should look for certain stipulations in the contract. They don’t know about them until they see a weird charge on the statement and have to call the credit card company. By then it is too late.
What to find in the fine print:
- transaction fees
- overdraft fees
- balance transfers
- Their so called “credit protection” fee
- Cut off dates
- interest rate information
There is so much important information they will put in this fine print because they know consumers will not take the time to read it.
Check the Grace Period
The grace period is the time between your purchase and when that purchase starts accruing interest. Some cards have a grace period, and some do not.
Many department store credit cards do not have a grace period. Once you make your first purchase you are getting hit with credit before you even leave the store.
Check the grace period and make sure that there is time before you starting gaining interest. That way you can take advantage of the rewards offered once you make the purchase and pay the purchase off before the interest hits.
