[ad_1]
At NerdWallet, we strive to help you make financial decisions with confidence. To do this, most or all of the products presented here come from our partners. However, this does not influence our assessments. Our opinions are ours.
Reviewing the terms and conditions of a credit card can be daunting. Language is not always easy and it is not uncommon to feel lost.
Two-thirds of consumers say they fully understand credit card rewards, according to J.D. Power's 2019 Credit Card Satisfaction Study. However, cardholders 'satisfaction with the issuers' explanation of the terms was not considered satisfactory in relation to the other features and services of the card.
But the more you understand your card, the better the financial decisions you make. "I'm a big proponent of calling the company and asking them to guide me," says Jamila Souffrant, creator of Journey to Launch, a personal finance blog and podcast.
Here's what to think about when browsing the small print on your card.
How much will the card cost?
You can understand the long-term costs associated with carrying a credit card by consulting the accompanying card agreement. Identify each potential charge and stay organized.
"Have all the material in front of you, take out your highlighter and identify the essential information you need to know – the interest rate, the fees, the conditions, the things of the same kind," says Yusuf Abugideiri. , a certified financial planner for Yeske Buie, a financial planning firm.
Start with the Schumer Zone, a hard-to-miss chart on the front page of your card agreement, which lists fees and interest rates, including:
Annual percentage rate
Your "standard variable APR for purchases" is the interest due on purchases when you carry a balance. Your APR will vary by card and credit rating, but the average APR in the second quarter of 2019 for interest-generating credit card accounts was 17.14%. You can avoid interest by paying your bill monthly. Note that some cards have different APRs for items such as balance transfers and cash advances.
Interest free introductory offers
Some cards offer a 0% APR intro offer that can help you finance a large interest-free purchase for a given period of time, or pay off an existing balance more quickly by moving it on the card. Note that this differs from a deferred interest offer. In these cases, "the interest runs and if you do not pay the entire balance before [the promotional period expires]you are going to have socks retroactively with all that interest, "said Chi Chi Wu, a lawyer at the National Consumer Law Center. Take note of the expiration date.
Annual fees
Annual fees are typical on reward cards or cards for those with poor credit (credit scores of 629 or less). For reward cards, Sufferer says that she is looking for benefits that can offset the costs. Cards designed for low credit usually do not offer rewards. A better choice could be a secure credit card with no annual fee. These require an initial cash deposit, usually a few hundred dollars, which becomes your credit limit. You recover money when you switch to an unsecured card or close the account in good standing.
Other expenses
Look for fees on things like cash advances, balance transfers or late payments. You can avoid some of them quite easily, but others may be unavoidable, depending on your habits. For example, if your card has transaction fees abroad, you will be charged each time you use it abroad.
Are there any reward limits?
If your card offers a rewards program, its terms may be included in the general agreement of the card or in a separate document. Here's what to look for:
Registration bonus
These can be generous, but you will first need to reach an expenditure threshold – often several thousand dollars – over a period of time. Do not spend too much to earn a bonus; Make sure you can really afford it, says Abugideiri. If you plan to keep the card for the long term, its current rewards will be greater than a one-time bonus.
Securities redemption
Terms and conditions often indicate that reward values vary depending on the value you are trading, but they do not always specify the value of each option. You may need to log in to your account or contact customer service. Be aware that the number of redemptions required for certain cards is minimal, which means that you can only redeem "starting at $ 25" or "in increments of $ 5," for example.
Eligible transactions
Credit cards with bonus categories may specify limitations. The purchase of gas at the pump can bring you a rate, but buying something at a gas station can bring you another. Cash advances or balance transfers are generally not eligible for rewards.
This article was written by NerdWallet and was originally published by The Associated Press.
[ad_2]
Source link