How To Keep Tabs On Your Credit Card Bill
It's important that you pay attention to the bills you receive from your credit card companies, particularly if you have negotiated a better deal with them. This goes beyond simply checking all the transactions to be sure there are no errors. It also includes checking things such as the interest rates, fees and changes to the card's terms and conditions.
Credit cards are really just loans and the companies that issue them have to by law inform you of the annual percentage rate (APR), the periodic rate and the annual cost of the debt. These things have to be revealed both when you first apply for the card and also on your monthly statement, whether Visa, Amex or a private card.
Some credit cards use a variable interest rate that will change as the economy changes. The companies that use this type of interest rate must tell you how they determine the rate and how often the rate could change.
You also must be informed of how long the grace period is to pay off your credit card bill. This is the amount of time you have to pay your balance off before the due date, without incurring any interest charges. The longer your grace period the better, because it will give you the ability to avoid finance charges.
If a card has an annual fee, this is something else that must be revealed to you. One of my top credit card tips is to avoid cards that have an annual fee. There are plenty of no-fee cards available and unless the card offers you a benefit that is worth more than the fee, there is really no advantage to cards with annual costs.
Your bank or credit card company also has to inform you of how they calculate the finance charges. Some companies use the Average Daily Balance which is when your total balance for each day of the month is totalled up then divided by the number of days in the month.
Others use an Adjusted Balance which means payments they receive during the course of the billing period are taken off the balance at the end of the past period and new purchases are not averaged in.
The third method is a Previous Balance, which is the total amount owed at the end of the last billing cycle, not including payments and charges in the current month.
The adjusted balance is the best method from a financial perspective. If you pay off your balance each month you won't have to pay interest.
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