In today’s fast moving world, credit card is very important for hassle free quick payments & purchases. However choosing the best credit card that suits your requirements & fits within your financial range is key for using it efficiently. We will assist you here in deciding what you should look for before you make a decision of choosing best credit card for yourself.
You don’t need to know all charges! Just Important ones.
If you see all the charges for a credit card then it might be difficult for you to compare. When you see terms & conditions of credit card, they might scare you. So it is better that you just focus on the important ones. You do not normally require to know about all charges; instead there are some charges that are important to understand and are more likely to incur during your routine usage. We will describe these briefly to make things easy for you.
There are 3 charges that you need to understand:
- Annual Fee
- Annual Percentage Rate (APR) for Cash & Retail Transactions
- Markup/APR for Installment Plans
Annual Fee:
These are fixed charges and applied once a year on your credit card. These are normally reimbursed by most banks if you use your credit card for transaction up to a certain amount as mentioned by the bank. Why is it important? Because, in any case these charges are going to be applied every year, irrespective of how much you use your credit card. Therefore, it is important that you check before what are the annual charges of the credit card you are looking for before making a decision.
Annual Percentage Rate
If you pay your credit card bill within due date these charges are not applied. These are only applied if you do not pay your total bill within due date or make minimum payment or any payment less than the total dues. These are the mark up rates applied to the transaction amount according to number of days between your transaction date & complete amount payment date. These rates vary according to the type of transaction.
Now, these are important because, although you try your best to pay your monthly bill regularly within time; but there is possibility that you might miss due to any reason at some point. May be your mobile app is not working, may be you do not have enough cash or balance in your account at that time. Anything is possible, so it is important that you choose credit card with less Annual Percentage Rate; so that in case you miss your bill payment, you do not get high service charges in your bill.
Markup/APR for Installment Plans
Now, this is also like APR. You do not need it usually when you pay your bills within due dates. But let’s say that you have used your credit card for many transactions and you cannot pay the bill within time. Or you want something eagerly or you are in critical situation where you had to make any transaction beyond your monthly expenses. In that case, you might consider converting your outstanding dues into installments and pay it in equal monthly installments (3-12) according to your requirements. Therefore, you need to see APR or Annual Markup for Installment plans right before making the final decision of credit cards. Remember sometimes banks provide promotional installment plans on your dues with some service charges but they are different from these regular markups or service charges.
To see a comparison of these charges offered by major Pakistani banks for their credit card products, CLICK HERE!
Other than these, if you have to make any foreign currency transaction while shopping online or traveling abroad, you should check their foreign transaction charges as well. To know more about foreign charges, CLICK HERE!
If you want to use your credit card for drawing cash, then should see their cash advance limits as well as its charges. To learn about brief detail of Cash Advance related charges by major banks, CLICK HERE!
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