Credit Cards that have seen tremendous rise of users in the recent times is gradually becoming an integral part of a person's lifestyle. Given the ease with which it can be used and the numerous facilities it provides and above all the affordability of these cards has increased its demand. Questions may arise on how these credit cards work, how the banks manage to provide credit and whether they get any profit or not and how they get this profit and what is the extra amount that you have to pay in lieu of the borrowed amount. Yes, it is the borrowed amount because you are purchasing the goods now but will be paying only after you get the monthly statement. So that gap period is the credit period for you and it surely doesn't come for free. This amount is called the interest. This is a very simple process that can be understood easily. When the applicant applies and gets a credit card he agrees to the terms and conditions of the bank. And under these terms and conditions is mentioned that the banker will charge a certain percentage as its fees or service charges or the interest. This may vary depending upon the period of repayment by the card holder. Depending upon this you get the high or Low Interest Credit Cards. Normally it is a monthly statement that comes to the card holder and if he makes the entire payment he will have to pay less and if he pays partly, interest will be levied on the pending amount that keeps on accumulating till it is completely repaid. Normally these interest charges are too high that deters a person to hold a credit card. Understanding this problem of the customers, banks have now come forward with many Low Interest Credit Cards. The higher the credit risk of a person the higher is his interest rate. So the credit card interest is not a fixed one and varies from person to person. Quite often it has been noticed that many credit card users have blindly used their cards for making purchases and without the least understanding of the interest rates have been making payments in installments of only the minimum amount, thereby accumulating huge interest. Finally they have ended up in great debts which they are unable to repay and with no other option left enter into a state of bankruptcy This is a really frightening situation but a true one that is constantly on the rise. In such cases where the debts have increased tremendously and you are not in a position to repay them, the first thing to tackle such situation is to surrender credit cards with higher rate of interest and retain the Low Interest Credit Cards. So, a sincere bit of advice is to not get carried away by the alluring 'Minimum Payment Amount'. This will only lead you to highly accrued debts. Rather, always make payment of the maximum amount possible. Initially you may find it difficult, but you will realize that, it is the wisest act to stay away from huge credit card debts. For more interesting information, you should visit: Low APR Credit Cards.
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