A responsible consumer may think that they have chosen one of the best credit cards, are paying their minimum payment due on time, are racking up points, and are being responsible with their money. Meanwhile, if they neglected to fully understand the terms of their agreement, they may not realize that even the best credit cards have some loop holes that result in the consumer paying more money in interest than they agreed to pay in the first place.
Generally, consumers are issued credit cards based on their credit history, and their income. These factors affect the rate that the bank, or card issuer decides to impose upon them. While typical credit cards in the US have interest rates between 7 and 36 percent, it is often very difficult to establish the exact interest rate of any card unless the card user is diligent about learning the conditions in their agreement, and realize that these conditions may also be subject to change.
For instance, banks create other fees that interrelate with interest charges as well, such as penalties for borrowing over the allowed credit limit, and failing to pay the minimum payment due on time. Failing to pay on time may also raise the initially agreed upon interest rate. As well, card issuers can legally increase the interest rate at any given time if they give for example, 30 or 60 days notice in writing. If the card user does not agree to these terms, it may be expected that the account be paid in full, which may prove to be a large inconvenience to the consumer. If the card user does not respond, it may be assumed that he or she agrees to the new terms, so it is advisable to always read the fine print on any credit card statement. Sometimes if the card holder does not make any new purchases, they may still continue to follow the former terms and conditions of the agreement.
Many introductory rate offers, even those of the best credit cards can be misleading. Such offers are often complex, being challenging for the card user to understand. In some case, they may be required to pay off the sub-balance by a certain date or have interest charged retro-actively, or pay a certain amount above the minimum due by a certain date. While these offers may appear to save the card holder money, in fact because of their complexity they merely obscure the real terms of the agreement, and cause the consumer to pay more in interest than they agreed to pay because the terms are not clear.
Another marketing strategy of many credit card companies is to offer rewards programs. It is difficult to compare credit card offers because of these types of programs that seem to be adding to the value of the offer at hand.
The best credit cards do not necessarily have the best interest rate as some charge interest differently (per day, or per month, etc.) The safest way to choose a credit card is to find out all the loop holes that may cause an unnecessary amount of interest to incur, and is one whose terms are completely understood and followed by the consumer.
About the Author:
The author of this article has been helping people repair their credit through the use of credit cards for the last 7 years. His goal is to teach people about the importance of building credit early. More info at
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Date Published :
Dec 21 2008