Credit Card Features
Do you know
anyone who doesn't have a mailbox overflowing with credit card offers? Open
any of them up and you'll find in large print just what makes this card perfect
for you. At first glance, this all looks good on paper, but it's the small
print that you don't pay attention to that will come back and bite you in
the end. All credit cards offer a variety of features. Knowing and understanding
these features will help you to decide which card is right for you.
Fees
Most credit cards charge fees for various things, and it is important to
know what these fees are and how to avoid them.
The annual fee
Some credit card companies charge you an annual fee just for using their
card. Because of stiff competition, you can often negotiate this fee away
if you call and speak to a customer service representative.
Cash Advance Fee
Most credit card companies will charge you a fee for cash advances. These
fees can vary but are usually somewhat hefty. Not only will they charge you
a one-time fee, but the interest rate for this money will be at a considerably
higher rate. Plus, unlike a regular purchase, where interest begins accruing
after some grace period passes, cash advances accrue interest charges from
day one.
Many card companies are competing for your business and are now offering
an introductory cash advance and balance transfer rates for a specific amount
of time. This lower rate can be applied to any balances you may wish to transfer
from another card. Although it sounds good, some companies will charge you
a fee for the transfer. Know what the fee is before you transfer any
balances.
Miscellaneous Fees
Things like late-payment fees, over-the-credit-limit fees, set-up fees, and
return-item fees are all quite common these days and can represent a serious
amount of money out of your pocket if you get whacked for any of these
fees.
Incentives
Since there are so many credit card companies, competition is stiff. Adding
incentives to their offers is one of the more popular ways to tip the scales
in their favor. Incentives like rebates on purchases, frequent flyer miles
on certain airlines, and extended warranties on purchases are just a few
of the bonuses that card companies will now offer.
For those of you who collect and use your frequent flyer miles, they also
have added incentives like travel insurance and car rental insurance for
your convenience. Of course, they are hoping that with all this traveling,
you are using their card to foot at least some of the bill.
Rewards
Many card companies are looking to keep your business and are therefore making
it worth your while to use their card. Just simply by using their card you
can accumulate points that will in turn earn you rewards. What kind of reward
depends solely on the amount of points you accumulate. Since you can't accumulate
these points without charging things on your card, this is a classic case
of 'you have to spend money to save money.'
Bottom line is this: Know what you need and what you don't. No sense in paying
for any features that you won't use.
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