Pennywise
Credit Card Interest Rates And Other Charges
by: Sahil | last updated: November 05, 2009
Category: Standard Credit Cards | Tags: credit cards, interest, interest rates, charges, fees
Category: Standard Credit Cards | Tags: credit cards, interest, interest rates, charges, fees
Credit card companies survive on interest rates and other charges that are a result of penalties and fees. Almost all credit card companies have made it even easier for them to earn interest by giving the option of making minimum payments. Even if a person makes minimum payments interest will be charged on the account; however, it won’t be considered as a missed payment.
Interest rates on credit cards vary widely from as low as 3% to as high as 23% depending on the country and the company. High interest rate credit cards usually offer other perks such as travel points or some type of insurance. On the other hand low interest credit cards offer a very low interest rate but come with a catch. They may charge a huge interest rate if the consumer misses more than one or two payments.
Low interest credit cards are only recommended for people who make timely and full payments. Even a couple of missed payments can mean paying almost 25% interest on the complete balance from the date of the transaction in the concerned month. Therefore it is best to apply for a card that has no annual fee, a reasonable interest rate and does not include any additional uncalled for services.
Except for interest rates there are other charges which can add up to a lot; some of them include the annual fee, overlimit fee, and late fees. You can also be charged for other services such as cash advance fees and the interest accumulated on the cash advances. However, almost 90% of the revenue generated is because of interest paid by the consumers and only 10% amounts to any other additional fees or penalties charged.
Some credit card companies even charge a flat fee or a percentage of the amount in balance transfers. It is advisable to check with the company about any fees or charges before making any balance of account transfers. Balance of transfers are nothing but the use of one credit card to pay off another. This is only favorable when the interest rate on one card is lower than the other.
The checks that you may have received in the mail from the credit card companies are also not free. A flat fee is usually charged for using the checks and it is strongly recommended that you refrain from using the checks provided by your credit card company. These checks may be convenient and liquid in nature but can cost you a lot in the long run.
Another expense that is common is the currency exchange surcharge that is levied if you use your credit card outside your country. The surcharge is usually 3% of the total amount spent; therefore its advisable to avoid overspending when you are in other countries. This is especially true if you travel to countries where the value of currency is more in comparison to your homeland currency.
Some of these charges can be waived off by calling the credit card company if you have a genuine reason. Many times the company waives off charges if the payment history of a consumer is immaculate. If you only have one missed payment, or if you have accidentally crossed your credit limit due to an emergency, or if you are not happy with the annual fee that is being charged then its possible to waive off these charges by calling the credit card company. All it needs is a little persuasion and explanation over the phone as to why you were not able to make the payment.
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