Having a credit card that pinches with every monthly payments? Majority of
us have experienced owning a credit card which burns huge holes into our pockets
and threaten to drive us into credit card debt. Why do some credit cards prove
more costly than others? Here are three important factors which cause this steep
rise in costs.
1. High APR's
Nothing increases the cost of monthly repayments and credit card ownership
costs than the APR. If you have goofed in the beginning and signed up for a
high apr credit card, things will definitely be worse for you. However, sometimes
we signup a credit card with low APR and then we default on repayments and the
APR's skyrocket, thereby increasing the cost of ownership, and monthly repayments.
A credit card which was having 0 intro apr will loose all its benefits as soon
as you default on repayments.
2. Taking Cash Advances
Credit card companies heavily advertise the fact that it is very easy to get
instant cash sign your credit card from any valid ATM and many of us fall into
this trap. Taking cash advances using credit cards attracts high APR for cash
advances. Cash advances from ATM's using credit cards is a very high cost loan
with heavy interest rates and not just the interest rates a cash advance fees
is also slapped on the customer, rubbing salt into his wounds.
3. Maxing out
When you reach your credit limits while borrowing from your credit card, you
are in the danger zone. Maxing out your credit card doesn't go well with credit
card companies and your credit rating drops, this increases your apr rates and
in many of the cases people who max out on their credit cards fall into credit
debt trap. Things go worse if you cross your credit limits and over borrow.
In this case a over-the limit fees is slapped and changes the way how credit
card companies deal with you.
Credit cards are for our convenience only if we use them properly and repay
our outstanding balance on monthly basis. This will ensure that we build good
credit history. Defaulting on repayments, taking cash advances and maxing out
on credit limits will only make the credit card ownership costly and increase
your credit card woes.