Costs Associated with Credit Cards
Written by Gloria Zhu   

When deciding on a credit card, be wary of additional fees that you should not be paying for. Also, there are many that you should try and avoid.

These additional fees include:
  • Late payment fees
  • Over limit fees
  • Bounced payment fees
  • Cash advances and convenience cheques
  • Foreign currency transaction fee
  • Membership fees
Tip: There is no reason to pay an annual fee to have a credit card. There are enough credit choices to choose from so that you do not have to get a card with an annual fee. Search wisely, and compare!

Interest Rates

These can be very devious. First of all, interest rate varies for credit purchases and cash advances. Cash advances carry a higher interest rate. Monthly payments will not count towards your cash advance balance until your credit purchases balance is paid off. This is because the longer the balance is unpaid, the more money the credit card company makes.

Also, when choosing a credit card, make sure that the interest rate advertised is not an "introductory" rate or a "variable" rate. This is because introductory rates only last a couple of months to a year. After that introductory period, your interest rate resets to the regular, annual rate and this is usually much higher than your introductory rate. The default rate is usually a lot higher than the introductory rate.

Get a low fixed rate on your credit card. This will give you a peace of mind because variable rates change with economic conditions. This means you could have a great rate one month and a terrible rate another month. However, be aware that fixed rates do change, but only certain economic factors change. Fixed rates differ from variable rates because they are not as volatile.
Last Updated on Tuesday, 21 December 2010 05:56