Knowing your credit card payment terms is critical for every credit card holder. It's crucial that you fully understand the rules governing your account and the condition associated with its use or disuse.
This remains true whether or not you are a regular user of the card. Many credit card companies slap you with an assortment of fees for a variety of reasons, including no use, use above or below certain limits and so on.
"The highest use of capital is not to make more money,
but to make money do more for the betterment of life."
- Henry Ford |
If you insist on using a credit card and you wish to maintain a continued state of sound financial health, you need to know well all the terms and conditions that affect the retention and use of your credit card.
Make no mistake, it is essential to scrutinize the fine print of the contract and all materials presented when the card is offered. This is where the less scrupulous card issuers tend to hide terms that can help them derive an extra benefit.
Some credit card payment terms include surprise charges or penalties for some specific act or omission related to the use of their credit card.
It is a Federal Law requirement for issuers of debit and credit cards to disclose the terms and charges of their programs. Card issuers comply with this directive, but use methods that are somewhat tricky in nature, less obvious to the average consumer.
A 2006 survey conducted by Braun Research revealed that thirty three percent of consumers are unable to read or understand the 'fine print' or so called disclosures and twenty percent cannot locate critical credit card payment terms.
As many as forty four percent of the people surveyed did not even know the APR (Annual Percentage Rate) that was applicable on their credit cards. Twenty percent did not know their credit limit.
Surprisingly, a whopping seventy percent did not know of the Universal Default policies. These policies state that even when you have a perfect payment history on your instant credit card, your interest rate can be hiked to a phenomenal twenty-five to twenty-seven percent if you are late in your payment to any other creditor!
Here are some things that you need to be aware of when you sign up for any credit card:
Low Introductory Rates:
Beware of such offers. Many credit cards offer 0% interest for an initial period, typically a preset number of months, after which you are charged reasonable interest of seven or eight percent.
However, built into the terms are declarations from the lender that they reserve the right to change the terms whenever they want, and for any reason. This of course covers hiking the APR further.
Grace Period For:
(a) Delayed Payments: Mostly there is no grace period for a delayed payment. If your payment arrives even a minute after the deadline, be ready to face an interest rate three or even four times the normal chargeable interest.
So practical advice is to make the payment at least a week before the due date, to avoid penalties and interest charges. (Or better yet, just don't use a credit card and avoid having to read the credit card payment terms at all!)
(b) Purchases: Many cards do not offer any grace period on payments for purchases made. Interest is charged right from the moment the sale is recorded.
Credit Limits:
Don't charge beyond your pre-established credit limits. Even if your transaction is approved by the card company, you may land up with a $20 to $30 fee for going over your credit limit.
These are just a few of the items consumers need to know about when using credit cards.
Educate yourself by reading the complete credit card payment terms upfront and avoid the hassle of being educated by the credit card companies later.
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"Never spend your money before you have it."
- Thomas Jefferson |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
