Credit cards are the new norm of our society. People consider it so essential that notpossessing them is sometimes frowned upon. Now with a credit card, there are many advantages, but we’ve all seen enough to know that anything that has some pros also has a couple of cons. Same goes for credit cards.There are some excellent features of a credit card, but there are also some you must avoid at all cost.
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Most credit cards come packed with money-saving benefits, offering perks ranging from car rental insurance to return protection to extended warranty coverage.
But some credit card features and perks come with hidden costs and charges that can threaten your budget — or cause you more hassle than the benefits are worth. Here are five such benefits that most people should avoid.
[BUTTONS2]Those reams of blank checks you receive from your credit card issuer may look appealing — especially if they advertise a short-term 0 percent APR offer on balance transfers. But think twice before using them. Convenience checks often come with substantial rates and fees. For example, if you use the check to pay bills or cash it at a bank, you could wind up paying a cash advance APR as high as 25 to 36 percent, and you may also be charged a transaction fee. Similarly, if you use the checks to transfer a balance from another card, interest-free, you’ll likely have to pay a balance transfer fee as high as 3 to 5 percent.
Using your credit card to withdraw cash from an ATM is also a bad idea. Some credit card issuers charge even more to withdraw cash from an ATM than they charge to use convenience checks. For example, an issuer might charge a 3 percent cash advance transaction fee if you use a check, but charge a 5 percent transaction fee if you pull cash from an ATM. You’ll also have to pay a higher cash advance APR if you carry over the amount you borrowed. Don’t expect to pay a tiny fee if you just withdraw a small amount, such as $20, either.
Issuers typically charge a minimum of $10 for transaction fees, or 3 to 5 percent of the full transaction, whichever amount is greater.
Balance Transfer:
This seems like an excellent way to get rid of your balance. It allows you transfer the balance of one of your cards to another which has a lower interest rate. What you don’t know about this bank transfer are the hidden fees involved which when added will increase the amount more than what you would normally pay.
A zero-percent balance transfer with a lengthy promotional period could save you money if you have a lot of debt to trim, allowing you time to pay off your debt without building up more interest. But these balance transfers often charge a fee, and if your card charges an above-average fee — such as 4 to 5 percent of the transferred balance — you could wind up paying hundreds of dollars in fees before you’ve even had a chance to tackle your balance. You’re better off instead looking for a card that doesn’t charge an initial balance transfer fee, but still offers a promotion, such as the Barclaycard Ring MasterCard, the BankAmericard Mastercard or the Chase Slate card.
Cash Advance:
This is subject to the cash you get from the counter through your credit card. This cash will have more interest tied to it. Along with this interest added to your bill, there will also be a processing fee when you are getting the money. Since the interest is more, your bill increases and becomes difficult for you to pay. This will increase the chances of you going into debt. Thus, no matter how necessary you feel like it, don’t get cash advances on your credit cards.
Minimum Payment:
This is
the biggest trick the card distributor plays. The minimum payment on the bill
will allow you to continue using the card without paying the full amount. It
may look like a remarkable thing, but it is a short-lived success since the
balance will face an interest as well as late fees that’ll increase your
payable bill, so try paying the full bill each month.