How The Credit Card Offer Should Be Assessed

Posted by Nick Niesen on October 29th, 2010

How many people do carry credit cards with a very high annual percentage rate when in fact they started out with zero APR? It's because the credit card industry is experienced in hiding fees and interest rates which are as flexible as to mount readily when the consumer has been already hooked into the system.

So to find the credit card with better deals, be sure that you fully understand the system governing your credit card. This means that you should have computed a rough estimate of the real cost of your credit system. A bunch of credit offers could have flooded your mail box, all of them sounding better than any other. And what should you do with all these flashy leaflets?

Don't be easily tempted to bite into the introductory offer that seems too good to be true, because it is usually too unreal. Zero annual percentage rates are generally promotions that cover only up to six months. It goes to show that after that span of time, you will then pay the annual charge of the credit company as you utilize your credit card. If you blindly agree to those terms then you may suffer rate hikes of up to 13% even when you promptly pay your balance.

For the case of those who pay their monthly bill promptly, the credit card with a grace period will work for you. This grace period is the allotted time for you to pay your bill before it could accrue interest. You see, some credit card providers charge you the interest upon your purchase. Therefore, you will pay an extra amount even when you pay your due on time.

When you read the credit offers, be sure to read all that has been printed including fees disclosure. No matter how small the printing is, its importance is a big factor to your financial management. This section contains the salient fees that are waiting to be charged to you.

These fees include the annual fees, closure fees, late fees and overseas transaction fees.

The annual fee can be avoided if you pay your bills on time and if the company terms state so. Better yet, find a credit card provider which values promptness in payment.

The closure fee is the charge when you are to close your account. Imagine this fee that you will still have to pay right before you leave the company? Subsequently, this is done to keep their clients, but as a client, you should have the freedom to close an account anytime when you have settled your accounts and when you are no longer satisfied with the service. So better actually ask the credit provider if they charge this fee before you sign up your application.

The late fee is of course the charge when you don't meet your due date. At least this one, you are charged because of overdue and it is mostly your fault.

The point here is that you have to read between the lines of the credit offers.

The overseas transaction fee is charged when you use your credit card abroad. This used to be a 1% fee by Visa and MasterCard. Later, because the providers want to profit more, it has increased to pin another one or two percent.