You might be very familiar with the credit card advertisements showcasing their offers on different types of purchases you do. But do you look in deep
What these credit card ads actually mean?
Every credit card provider will come up with tempting offers, discounts, cash back to grab customer attention. Indeed they want to one up with competitors in all aspects. In the customer perspective, Is it ok to decide something by looking at marketing slogans? Come lets exactly understand how the credit card can benefit you. (not you but the company).
Is it Good to see single-digit interest?
Have you ever seen a credit card advertisement offering at ‘only’ 2.99 per cent interest rate? But wait this is not what you expect, take a closer look –this is actually interest rate for a month.
When you convert this into Annual percentage rate, this number will be huge as 40 per cent ‘only’ per year.
If you fail to pay the outstanding balance on your credit card by the due date every month, you may end up by paying a huge interest rate.
So before you plan to choose the credit card, the very first thing you need to ask is- What APR the credit card would charge? After all, the APR will give the true picture of how of the annual cost of borrowing with a credit card.
So it is better to compare credit cards with the APR. If you compare the credit card with an interest rate of 40 per cent per annum with a non-salary transfer personal loan at 8-12 percent per annum –you make a clear idea about how your interest eat up your monthly payments.
Huge cashback offers
Are you the one who got a great deal on your new credit card? An offer that can cash back you ‘up to’ 10 per-cent on your purchases? But do you know what the deal details?
First of all, with such a high cashback percentage you can spend to only limited categories. There are a handful of credit card providers can offer up to 10 percent cashback on spending categories like a supermarket, utilities and school fees.
This doesn’t mean that you can encash the whole 10 percent on any amount you spend. The credit card provider will also put a cap on the maximum cashback amount that you can potentially earn every month.
there will also be a minimum spend requirement for each billing cycle. And what if you accidentally missed making the minimum payment? So before opting cashback credit card go through the cashback terms and conditions.
A free roundtrip with air miles credit card
If you are a lot to travel, an air miles credit card can save your day. Is it true in all cases? Let’s say you see two credit card advertisements that both promise you 1 mile for every USD 1 spent – Do they offer the same value? The answer is no.
Before you get an airmile credit card the question you should ask- what are these miles worth? These air mile cards carry different worth let’s say Card A could get you a flight to London for 50,000 miles, you might have to spend 70,000 miles to get the same flight with Card B.
Other restrictions to look after is blackout travel dates, no option to redeem miles for partial payment of travel booking, complicated offline redemption process and more.
Aware of your air miles expiry date, Don’t miss out on using them.
Besides this , there are many other types of credit cards that offer Zero per cent balance transfer, zero per cent instalments, and so on. Get a good knowledge about them before opting one.
And don’t neglect to see the fine prints. Every credit card seems to be the best when advertised but understanding the terms &conditions will make you choose the right card for you.