Facts About the Dangers Of Using a Credit Card

Introduction

You must be cautious over a few credit card facts, or you will become a victim of the associated risks of being a credit card owner. Some credit card owners develop a habit of overspending; it is an addiction comparable to gambling or drug abuse or alcoholism. Since they do not have pay cash immediately, they indulge themselves with unnecessary spending, buying unnecessary things at exorbitant prices.

History

When you are applying for a credit card for the first time, it is wise to become aware of certain credit card facts to avoid many future untoward incidents. The credit card issuing companies may lure you with flattering information such as your credit worthiness being pre-approved, that you are one of their one of the most valued customers, starting with an initial low rate of interest. But, in a subsequent period when you will become used to easy spending and addicted to overspending, they will gradually increase the interest rate and impose other charges.

Knowing a few points on credit card facts before will help you to derive the real benefits of a credit card.

Features

Here are few credit card facts for your help:

• They may offer you through direct mail premium cards with lower interest rates while the fine prints (barely legible) says if you do not qualify for the premium cards, the company will charge higher annual charges. Very few applicants read the fine print carefully and become a victim of this trap. This is a significant credit card fact that every credit card owners should remain aware of.

• The card-issuing authorities regularly check the credit reports on late payment of the card holders. Late payments are charged with a higher rate of interest.

• Keep a regular update of the grace period. It is the period within which your transaction does not accrue any interest. It shrinks and varies as time changes and again varies among issuing authorities.

• Your guide to credit card facts must include the method of calculating billing cycles followed by the card issuers. Some issuers use the standard one-month balance method for calculating interest while many follow the two previous months balance method. The card-issuing companies calculate the daily average balance by adding the amount of the daily balance outstanding in the billing cycle and dividing the same by number of days in the billing cycle, such as 30 days or 60 days, etc. If your daily balance is calculated on a two month basis, your previous month balance will or may involve some interest charges and outstanding balance which you might have been paid off earlier, in spite of that you have to pay interest on that amount as it is calculated on 60 days basis.

• If you do not use your card, the card issuing companies may charge inactivity charges for idle cards.

• If you miss to pay amount due on time, you have to pay dearly. Your credit card facts recorder must keep regular records of your limits and grace period regularly.

• You should never go beyond your credit limit or remain ready to pay hefty charges.

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