It's true that you are kept away from the real power to shop, if you do not have a credit card with you. However, if you really do not keep a control on your purchases, you are going to see the darker side of this magic card. Today, an average US citizen has 2-3 credit cards and they make almost all the transactions using these cards. And unfortunately, a good share of these card holders is in the trap of debts. So, it's very important for you to understand how the card works and how to stay on the safer side. Here are a few things you need to know.
Grace period and interest rates
These are the two terms that you often come across when you are dealing with a credit card. Grace period is the time limit offered by the bank to let you repay the amount you have used without any interest. The standard grace period offered by the majority of the banks is 45 days but it may vary upon the card you choose or the bank you deal with. Interest rate is the amount you need to pay as interest on the pending payment after the grace period. Well, the interest rate for the online purchase would be different than the cash withdrawals. So, closely check the terms before signing up the deals. Again, there is a set period for you to repay the amount along with the interest and if you fail to pay even after this period, you are subjected to paying penalty. This is the time when the credit card bill starts mounting up and you end up paying double or even more than what you have used. Apart from the interest rates and penalties, you are also subjected to paying an annual fee for keeping that in your name.
One card can be used to pay the bills of another. This is a kind of cash rolling that a lot of people do but there are chances that you may end up paying Interest for both the cards, if you go wrong in this rolling. So, to be on the safer side, you should use your credit card only when it's necessary and pay all your bills on time.
Not all cards let you pay in installments
There are lots of credit cards that let you pay the used amount in different installments. However, there are also cards that do not offer you such a facility. So, check with your bank about the repayment terms before you sign the deal. Of course, there would be a lot of attractions like a low interest rate or a high credit limit bundled with the cards that require you to settle the bill in one payment. However, if you cannot afford to make big payments at once, either do not overuse the card or opt for another card that lets you pay back the amount in installments.
Though the credit card company sends you the credit card statement at the end of every month, make it a habit to note down the amount you spend using your credit cards, so that you can double check the statement when it arrives. This way you can claim for a refund, if you find any unauthorized charge on your credit card statement.
Grace period and interest rates
These are the two terms that you often come across when you are dealing with a credit card. Grace period is the time limit offered by the bank to let you repay the amount you have used without any interest. The standard grace period offered by the majority of the banks is 45 days but it may vary upon the card you choose or the bank you deal with. Interest rate is the amount you need to pay as interest on the pending payment after the grace period. Well, the interest rate for the online purchase would be different than the cash withdrawals. So, closely check the terms before signing up the deals. Again, there is a set period for you to repay the amount along with the interest and if you fail to pay even after this period, you are subjected to paying penalty. This is the time when the credit card bill starts mounting up and you end up paying double or even more than what you have used. Apart from the interest rates and penalties, you are also subjected to paying an annual fee for keeping that in your name.
One card can be used to pay the bills of another. This is a kind of cash rolling that a lot of people do but there are chances that you may end up paying Interest for both the cards, if you go wrong in this rolling. So, to be on the safer side, you should use your credit card only when it's necessary and pay all your bills on time.
Not all cards let you pay in installments
There are lots of credit cards that let you pay the used amount in different installments. However, there are also cards that do not offer you such a facility. So, check with your bank about the repayment terms before you sign the deal. Of course, there would be a lot of attractions like a low interest rate or a high credit limit bundled with the cards that require you to settle the bill in one payment. However, if you cannot afford to make big payments at once, either do not overuse the card or opt for another card that lets you pay back the amount in installments.
Though the credit card company sends you the credit card statement at the end of every month, make it a habit to note down the amount you spend using your credit cards, so that you can double check the statement when it arrives. This way you can claim for a refund, if you find any unauthorized charge on your credit card statement.