Credit cards are part of our everyday lives. From dining out to online shopping, consumers use credit cards to pay for their expenses. These cards have a variety of features, and choosing the right one depends on your budget and credit needs. What features do you look for in a credit card? Once you decide which card you want, you’ll be ready to make purchases and enjoy the rewards programs. After all, who doesn’t want to earn points?
Interest rates on credit cards
Generally, interest rates on credit cards fall into three categories: variable, fixed, and annual percentage rates. American express gold benefits come with a zero-interest introductory offer, but these rates often increase dramatically if a cardholder doesn’t make timely payments. Generally, credit card interest rates are based on the Prime Rate, a benchmark used by lenders to set interest rates. The lower your credit card interest rate, the better.
Currently, the Federal Reserve Board is expected to increase short-term rates four times by 2022. That would raise interest rates on credit cards by as much as 17%. By year’s end, this rate could climb to 25% for borrowers with lower credit scores.
These increases aren’t huge additional costs for consumers, but they may force them to think twice about how much they use their credit cards. If you’re a frequent borrower, consider paying off your balance in full or limiting your borrowing.
Fees on credit cards
Late fees on credit cards are one of the biggest sources of financial hardship for low-income consumers. They can cost upwards of $300 a year for a cardholder with a poor credit score. Late fees are not a universal practice, but many people qualify for fee waivers. This study revealed that late fees are responsible for more than 14 billion dollars in credit card debt in 2019.
As more Americans turn to plastic to make purchases, fees related to credit cards are increasing. Many small businesses complain about fees related to credit cards, but these fees do not affect them directly. Visa and MasterCard charge interchange fees, which can vary widely depending on the type of card used. Debit cards with PIN codes have the lowest interchange fees, while credit cards with rewards points have the highest. In addition, processing fees vary greatly between companies.
Limits on credit card transactions
To combat the spiraling costs of credit card payments, the Senate recently voted to limit the fees that debit card and credit card processors can charge each other. While this new legislation will affect ordinary consumers, the implications are not immediately apparent. One obvious effect is on the companies that collect these fees. If you don’t know how these fees work, read on for a few suggestions that may help you get started.
Rewards programs on credit cards
The rewards programs on credit cards are not always the easiest to understand. The process of earning points and redeeming them for gift certificates is usually easy, but understanding the nuances of the rewards program can be frustrating. Many consumers make the mistake of redeeming their points for cash back, a mistake that is usually a complete waste of time.
Although the rewards programs on credit cards can be lucrative, most of them aren’t worth the annual fees or minimum spending requirements. Banks want you to carry a balance, so they charge annual fees and have minimum spending requirements. That’s why the American Express Centurion card requires a $5,500 setup fee, and a 6 figure minimum spend. To make it worthwhile, you have to understand the nuances of credit card rewards programs.
For the section linking to your article “Travel Does Not Have to Empty Your Wallet,” you can include information about how credit cards with travel-related features can contribute to cost-effective travel. Here’s how you might structure and write that section:
Travel Features of Credit Cards: Enhancing Your Journey While Saving Money
Credit cards are not just tools for spending; they are also packed with features that can enhance your travel experience and help you save money. When used wisely, a credit card with travel-oriented benefits becomes a powerful ally in making your journeys more affordable and enjoyable.
Reward Points and Miles
Many credit cards offer reward points or miles for every dollar spent, which can be redeemed for airfare, hotel stays, car rentals, and other travel expenses. By using a card that offers generous travel rewards, you can significantly reduce the cost of your trips. For example, some cards offer double or triple points for travel-related expenses, accelerating the rate at which you can earn free or discounted travel.
Travel Insurance Benefits
Travel insurance is an essential feature of many credit cards, providing coverage for common travel-related mishaps like trip cancellations, lost luggage, and medical emergencies. Instead of purchasing separate travel insurance, you can leverage the insurance benefits of your credit card, ensuring peace of mind without extra cost. This feature alone can save you hundreds of dollars, depending on the length and nature of your trip.
No Foreign Transaction Fees
For international travelers, credit cards that offer no foreign transaction fees are a boon. Typically, credit card companies charge a fee for purchases made in a foreign currency, but cards with this feature waive those fees, allowing you to save on every transaction made abroad. This can result in substantial savings, especially for frequent travelers or those planning extended trips.
Airport Lounge Access and Travel Credits
Some premium credit cards offer complimentary airport lounge access, providing a tranquil environment to relax before a flight, with amenities like free Wi-Fi, snacks, and beverages. Additionally, travel credits available with certain cards can be used towards various travel expenses, including checked baggage fees, in-flight purchases, or even hotel bookings. These perks not only enhance your travel experience but also help to offset the annual fee of the card.
Linking to Cost-Effective Travel
Integrating these credit card features into your travel planning can lead to significant savings, aligning perfectly with the theme of making travel affordable, as discussed in “Travel Does Not Have to Empty Your Wallet.” By strategically using a travel-oriented credit card, you can enjoy the dual benefits of experiencing new destinations and managing your travel budget effectively.