As highlighted in the previous article, there are a number of aspects that can cause problems when using a credit card. Following on from this, the article below points out the ways in which they can be avoided.
… On your credit card should be avoided like the plague. If you take a quick look in your T&C; you will see that the interest charged on cash withdrawals is much higher than that of purchases. On average, lenders charge interest in the region of 25% for withdrawals, with some as high as 27.9%!
On top of this, many lenders charge a cash-handling fee, which is around 2.5 to 3 percent of the amount withdrawn.
Using your card abroad is another costly business, with the majority of lenders adding a foreign currency loading fee on top of purchases. On average, this adds around 2.75% to any purchases you make abroad.
Again, there are a handful of cards that do not incur this charge, and its worthwhile checking before you use your card abroad.
It’s worth noting that the same phenomenal interest rates for withdrawing cash at home will also be applied abroad, along with the loading fee. Therefore, withdrawing cash abroad on your credit card is by far one of the most costly things you can do.
Often an area of annoyance for those new to the credit card market is the lack of access to higher credit limits. This is something the lenders do to see how you manage your smaller credit limit; if you are careful then chances are they will be eager to increase your limit.
More recently however, lenders have slashed customer’s limits in response to the credit crunch. For the most part, there is nothing you can do about this; those willing to transfer their balance could switch to a lender offering a higher limit though.
Although not something that most lenders employ, monthly interest can drastically increase the amount of interest you have to pay. This is because it treats all the months purchases as if they were made on the first day.
The alterative to this is daily interest, which charges interest as it builds up throughout the month. As mentioned, the majority of lenders use this method; it’s still worthwhile checking the fine print though.
As you can see there is a wealth of things that you should be wary of when using or applying for a credit card. The best way to source credit cards it to compare them online, where you will be able to find a wealth of deals including 0% credit cards, reward & cashback cards etc.