Credit cards have become our daily needs. It helps to shop as much as we want without needing to carry hard cash. However, there are some things which banks never tell you when you get a credit card from them. Here are the points you need to know before you go for credit card.
Interest Backdating.
Almost every credit card issuer charge interest from the day a charge is posted to your account if you don’t pay in full monthly. However, some charge interest from the date of purchase, days before they have even paid the store on your behalf. You should always pay your bill in full by the due date.
Two-Cycle Billing.
Credit card issuer uses this method to calculate interest. They charge two months worth of interest if you failed to pay off your total balance in full. The problem arises when you switch from paying in full to carrying a balance from one month to the other. To avoid this always pay your balance in full.
The Right To Set Off.
If you have money in a bank account and also have a credit card, you may have signed an agreement while opening an account. Which allows the bank to take those funds if you become delinquent on your credit card.
Fees Are Negotiable.
You have to pay some fees every year fro your credit card. You may also be subject to finance charges of over 18%. Some bank, furthermore, drops the annual fee, and reduces the interest rate if you are good customer.
Interest Rate Hikes Are Retroactive.
When you get a credit card with a low “teaser” rate, such as 7.9%, then if the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate. To avoid it, you need to pay in full before the rate increase.
Shortened Due Dates.
Most credit card issuer provides a grace period of 25 days in which you have to pay for new purchases without incurring finance charges. Some banks shortened it to 20 days but only for customers who pay in full monthly.
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