Thursday, September 13, 2018

Why You Should Read Your Credit Card Terms and Conditions Carefully

A credit card is a plastic card which helps to buy merchandise on credit and pay for them later on. Credit cards come with enormous benefits like welcome gifts, reward points, cashback etc. 

 You may know all of the advantages the Credit card offers, however you most likely don't know everything about the terms and conditions of credit cards. 

While you may have avoided the information boxes when you applied, you'll get a cardholder agreement after the approval of your credit card application.

In case you are among those who don't read their card's terms and conditions and throw it in the junk without understanding it, you're not the only one. 

This is a major error. A great deal of helpful information is found into the cardholder terms and conditions You must read it carefully before applying for the card. 

Given below points will help you in understanding why you should read your credit card terms and conditions carefully:

Annual Interest Rates

If you always pay all your credit card outstanding bill before the due date and never withdraw cash using a credit card, then interest rates are not that important. But imagine a situation where you are unable to pay your credit card bill on time due to any reason like a medical emergency, you lose your job or any other reason. 

In such a situation interest will be applicable on your credit card outstanding if it is paid after the grace period. So, reading your credit card terms and conditions is important, as it includes details relating to the interest rate applicable.

Grace Period

Grace period refers to the time period between the end date of the billing cycle and your bill due date. During this period, you have to pay all your dues, you will not incur any interest or late payment charges during this period. 

Different cards come with a different grace period. Usually, it is between 18-21 days. So, it's better to read your credit card terms and conditions to avoid any confusion at a later stage.

Minimum Payment

Minimum payment is the amount you pay when don't have sufficient funds to pay the entire credit card bill. Paying minimum amount helps in keeping your credit score unaffected. Read about the minimum amount you are required to pay.

Joining Fees and Annual Fees

There are many credit cards which come with nil joining fees. But after the first year, you are charged an annual fee on it. Reading about different fees and charges applicable is very important. Credit card terms and conditions contain all the required information relating to it.

Welcome Bonus and Reward Points

Credit card issuers offer a host of benefits to all its customers like welcome gifts and bonuses. Then you earn reward points on all your purchases made using a credit card. 

But at a times you can redeem those points only after a fixed minimum level of spending and at select partner stores only. Therefore, reading terms and conditions is important to know the actual benefits attached to the credit card.

Hence, always read your credit card terms and conditions before selecting a card to know the interest rate, annual fees and other charges applicable. Then select a card as per your requirements. You can read terms and conditions, and then apply for a credit card through different online aggregators.

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