In recent decades, the number of credit card users is only soaring because of the alluring amenities they assure their customers with as a result of subscribing to one and paying for their purchases and services through that card. Credit cards are one of the important assets these days! If you have it, you want to protect it all the time as losing one can prove heavy on your pocket. It lets you enjoy credit at no extra cost. That’s the biggest perk that most credit cards provide. The application process for credit cards is opaque which means that even if you apply, you don’t know at which stage will it get rejected. So if you are stepping into the world of credit (and thinking to get your first credit card) then we have gathered some important elements for you to consider during the application process.
Grace period: The potential benefit of credit cards as mentioned above is that it provides you with free credit. The money doesn’t get debited from your account instantly and you can shop even if you don’t have liquid cash or balance in your account. Always research the grace period that the credit card company is willing to provide. The going rate is usually 1.25 months. For example, if your credit cycle is from the 23rd of the month (say Dec 23) to the 22nd (say Jan 22) of the next month then your payment is due by the 12th of next month i.e., Feb 12 in our example. This is a decent credit period and should be good to approve, the bigger the better!
Interest charges: if you miss or fail to make your payment then companies charge hefty fees in regard to the amount of interest which can range between 1-3% per month on your average daily balance. This can be huge since the interest gets added every day and increases your payable amount. Interest rates are usually on the higher side, but you should be able to negotiate if the company is charging high rates of interest.
Reward points: Most credit cards have reward incentives for their customers. It might confuse you at first how these credit card companies earn by giving you credit and rewards. The truth is, credit card companies have tie-ups with most if not all merchants. Merchants pay these companies for the ease of service. A share of these benefits is passed on to customers through rewards. The reward points can be redeemed in the form of cashback, free petrol, travel rewards, or at various outlets. You earn these reward points through your spending. If the rewards provided (for instance movie tickets, free vouchers, flight vouchers, etc) are not useful for you then you should go for cash-back cards where you can redeem points, and the equivalent value gets deducted from your payment of the next cycle.
Hidden Charges and Fees: Few credit card companies charge an annual fee, late payment fee, foreign transaction fee, balance transfer fee, over-the-limit fees, etc. Always speak about hidden charges and types of fees as they impact your usage.
With such easy funds at hand, it might sometimes become difficult to keep track of your expenditures and you end up with the decision of canceling it; but over the time of its usage, your card must have accumulated some credits for your disposal. Here are some ways of canceling a credit card, without wasting away the credits.
Pay down the available credit balance before the card is entirely closed: The postulation that will work in your favor while closing a credit card is using the remaining available balance of your cards to pay off the debts; starting from the smallest debt first, however small it is after being clubbed with the interest and then moving on to the larger ones combining the previous funds. This will turn out to be the maximum utilization of your credit score in the amount of time the bank takes before completely closing it down.
Redeem the obtainable rewards: Before you decide on completely shutting down the credit card services, check for the amenities that have been awarded by the brands or companies after your usage of their service and redeem those in the most convenient ways possible. Also, confirm the number of days that are left to avail their credits and also if any additional principle needs to be punched along to enjoy the complete utility.
Credit repair: You can ask help from credit repair companies to elevate the condition of your credits in exchange for fees so that it shows better in your records.
Communicate your needs to the bank: The best thing to do would be to inform the bank or your credit card company that you wish to close your card as soon as possible and ask them to check for you the remaining debt and ask them to notify you accordingly. Make sure that the balance is completely null and void so that while you think you do not owe anything to them, the credit interest might just keep on adding without you taking any notice of it.
Have a hard copy of the solicitation: It is always a wise idea to keep with yourself one of the hard copies of this plea to the credit card company or to the bank; so that the record of your credits is known to both you and the bank and there is no discrepancy regarding the same from their part in the future. Besides, request them through an e-mail or letter to send you a receipt with the transactions, credit scores, and other details, and also with it ask them to generate a confirmation letter online or offline for the same.
Check on your credit report after the action has been taken: Ask your company to generate a copy that states that your account is permanently closed; its reports will show themselves for a period of up to ten years which will lead to the positive passing on of your credit information with time.
