Interest ratesSome credit cards operate on a tier system and only offer the lowest interest rates to cardholders who have been consistently prompt with their payments for an extended period of time. New cardholders usually start off with interest rate as high as 17%, and then the interest rate is gradually reduced to 9 or 8% IF they maintain good payment records for the next 12 months. Nonetheless, some cards start off with a low interest rate for a set period, and then the interest rate will be reverted to the highest default if the payment record is not good. Regardless of these mechanics, you should always settle your bills on time if you wish to benefit from low interest rates.
Fees and chargesAll credit cards come with annual fees and government tax charges. The amount of charges is dependent on the type of credit card. Most of the time, bank will waive these charges provided that the cardholder meets a certain requirement. It could be as simple as using your credit card with a specific amount of times or by redeeming your reward points.
Also, if you’ve been a long-standing customer, you may consider to call up your bank and ask if they will waive the annual fee. If you’ve been a good paymaster and a valuable customer, bank might consider doing this for you.
Cashback caps and ratesCashback credit cards often come with a cap - a maximum amount you are allowed to earn in a given month or year. Aside from that, you should also take note of the cashback rate on your credit card and which categories are eligible for cashback. These information will help you make wiser spending decisions and save you money in the long run.
Reward pointsLike cashback cards, credit cards with reward points can be used to soften the cost of future expenses when you redeem them for discounts or vouchers. However, make sure you understand how the point conversion system works as different banks operate under different policies. Some credit cards reward you extra points if you shop on certain days or with specific merchants. Some reward points also tend to expire after a certain period. So, if you’re not too big on micromanaging your reward points, it is better to look for a card that offers ‘evergreen’ reward points.
Credit limitHaving your card rejected is not only embarrassing but it also might alert the bank to assume that your card was stolen and used for suspicious activity. Some banks also charge an ‘overlimit’ fee if you spend beyond your credit limit.
To avoid such complications, you should check your balance often and ensure that you are reminded of your payment due dates. The easiest way to track your credit balance is by checking your online account. Online account helps you to track your spending and to avoid exceeding your credit limit. Your credit card billing cycle usually starts on the date that you’ve activated it.
Indeed, reading and making sense of your credit card terms and conditions take a lot of time and concentration. However, it pays off if you can avoid any future complications and extra surcharges.