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Credit Cards Your Plastic Friends |
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Credit cards are convenient when you don't have cash and need to pay for something. They're especially useful during emergencies. Credit cards are not only sources of urgent cash; they have many other uses as well. But, to use them without thinking about the consequences could lead to financial ruin. There are some things that every credit card user should know. It's never advisable to withdraw cash on credit cards. In fact financial experts advise consumers to try to not withdraw cash on credit cards, as you'll generally be stung by high interest charges and added fees. Anyone who is considering withdrawing cash on credit cards should be aware of the disadvantages of doing so. And, be aware of the terms on your card. You'll generally be charged from the date of the transaction, so there's no interest-free period. And if this isn't bad enough, you'll also need to pay a set fee or percentage of the amount withdrawn, just for using the facility. But occasionally card issuers offer promotional rates on cash advances, sometimes as low as 0%, although cash advance fees and conditions should be taken into considered. And if you intend to use your credit cards for purchases, while traveling to foreign lands, you need to assess in advance just how much it will cost you to use it overseas. If you don't inquire in advance you might be in for a nasty surprise when you get your bill, since credit cards have extra charges when used abroad. Credit cards exchange rates are based on the Visa and MasterCard wholesale rates, with a loading percentage, usually added by the card issuers. This can vary from 0% to 2.75%, depending on the credit card. As it's an exchange rate, in addition to the set fees in place for withdrawing cash, and of course you'll pay interest at the standard or introductory rate for both cash withdrawals and purchases. The actual rate applied may also vary between EU and non-EU countries, so it's worth your while to check this out before you set out on your travels. So, when selecting credit cards for use abroad, you should pay some attention to the other facilities on offer, such as the provision of a replacement card in the event of the loss or theft of the original. Some cards could have extra benefits, like an international assistance package and insurance for flight delay, lost and delayed luggage and personal injury. There are many credit cards issuers who reward their cardholders with a range of useful benefits, and these can prove a valuable asset to any household. For example, some cards include domestic warranty cover that'll protect your electrical purchases, for up to a year after the manufacturer's warranty expires. This price promise cover ensures you'll be refunded the difference, should you purchase an item and then find it cheaper elsewhere, including the January sales. Some credit cards have a free purchase protection insurance to cover your purchases against any losses, like theft or accidental damage, for a specified period. Another feature is that some credit cards issuers use a price-for-risk strategy to determine the interest rate you'll pay. In basic terms this means that they will assess your personal circumstances and credit history, and only after this will you be offered one, of a number of rates. The rate that they offer you in the end may be different form the rate quoted. Also, many credit card issuers are able to offer credit cards to more people through the practice of down-selling. By down-selling their products card issuers can offer an applicant an alternative product, when they fail to qualify for the product that they applied for. A reason for down-selling is an applicant's failure to qualify. For example, a person who has applied for a platinum card may not meet the minimum income requirement. Therefore, he will be offered a classic or gold card as an alternative. However, this practice is different from pricing-for-risk and the two should not be confused. Credit cards are convenient and can be used in any situation. You can use them for hotel, car rental and other reservations. You can also use them to buy items over the phone or the Internet. They are also useful in emergencies, like unexpected car repairs. And provided you are careful about spending too much, there is no reason to worry, when using credit cards. |
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