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Understanding credit cards will help customers see through the strategies used by credit card companies to get the better of them. Credit card companies are looking for profits all the time, which is why you must be sceptical about credit card rewards. Understanding credit cards means looking at the whole dynamics of how the cards work including the parameters and fine print that come with the credit cards.
A lot of reward cards with attractive offers eat into the customers` savings through an annual fee which could be as high as 100 dollars or even more. The annual fee is higher for the cards which are more in demand like the frequent flyer and frequent shopper reward cards. This is all the more reason to check the annual fee on the card and ensure that it has been waived at least for the first year.
With the new credit card reforms, credit card companies have lost a lot of revenue. Therefore, they are trying to make up for it through various types of fees. Application fee, activation fee, interchange fee for foreign exchange expenses and various other types of a fee levied by the card issuer shouldn`t be excessive. If they are, it is best to pass instead of making yourself vulnerable to the fees which could be hidden.
Two types of fees that are levied as penalties are the late fee and the overdraft fees. When accepting a credit card offer, ensure that they are not way too high. Penalty could also include raising your APR excessively, although, thanks to the credit card reforms, these rates must be kept down if you make your payments consistently for 6 months. Nevertheless, you will have to keep an eye out for all these fees. The grace period available to you after the bill has been generated and the general flexibility you get will give you a good idea about how trustworthy a card issuer is.
Credit card rewards are used by card issuers to entice the customer. However, understanding credit cards involves understanding the usefulness of these rewards. Rewards with a lot of caps, limitations and other conditions before you could avail them are practically not worth pursuing. On the other hand, low interest rate and cash back offers are something that is useful and hence better than discounts, bonus, loyalty, and reward points.