Can you imagine conducting your financial affairs without a credit card?
Most of us rely on our credit cards to meet our daily expenses or to shop without the need of cash in our pockets. But a lot of us don’t really take out the time to understand the finer details associated with using a credit card. The result? We end up in a never-ending debt cycle where we keep on borrowing to pay previous bills, piling up considerable interest in the process.
But there are ways to keep your credit history spotless. You just need to know some of the hidden credit card expenses and how to avoid them.
Higher interest rates on cash advances
You’re reaching the end of the month and there still are bills to pay. You’ve spent your entire salary but you can’t wait for the next paycheck. Surely the sensible thing to do is to borrow some cash against your credit card, right? Wrong. Getting a cash advance on your credit card may seem like the right thing to do at the time but it’s extremely expensive. The interest rates on cash advances are significantly higher than regular purchases on the card. Therefore, it’s better to borrow some quick cash from a person you know instead of doing it against your credit card.
Over the limit penalty on a maxed out card
One of the most important rules of using a credit card is that you have to know your limit and when you’re about to go over it. This is why it’s essential to always keep track of your statement. If you’re over the card limit and the company approves your transaction, you can be charged not just the over the limit penalty but an additional late fee as well.
Time-specific late fee
If you are a regular user of a credit card, you know that even a single late payment can add considerable weight to your statement. To avoid this, you know you have to pay it on or before the due date. But did you know that, in addition to a due date, there’s a due time as well? So let’s say the due date for payment is the 15th of January. What you might know that missing the due time on the 15th of January can also cost you the late fee? That’s why it’s always better not to leave your payments till the last moment and pay up well in advance.
This is one of those things that might sound ridiculous to you, but it’s true. Some credit card companies charge a fee if you don’t use your card for a particular period of time. Others set an annual spending limit and, provided if you don’t reach it, charge you extra for it. Your company may also ignore the inactivity fee for the first year but charge for the subsequent years. If you want to avoid that, you need to discuss this with your representative beforehand. If you haven’t, it’s not too late to pick up the phone even now.