Credit Card Trap!
I recently received an email from one of my readers with regard to explain what the disadvantages of a credit card are. I discussed with him personally mentioning that you can make credit cards work for you if you are smart enough. And to be successful, you have to give up being revolvers ie you need to stop paying minimum payment due on your card.
Below are the few ways in which credit card companies try to trap you and they are true!
1. Auto closure of accounts
Several banks in 2007 had given me credit cards which I had not activated. Once when the recession or slowdown hit this part several banks started auto closing credit card accounts without sending prior notice to me. This is a risk. In other cases few of my friends found that their credit limits on credit cards were reduced without any notice.
Banks have been keeping their customers uninformed on this one. They levy charges and fees without notifying customers. Overlimit fee, reactivation fees and so on. Just read the terms and conditions and you will know the difference.
3. Rewards….what rewards?
In the past credit card companies used to generously dole out rewards like free air tickets and other wonderful rewards. But nowadays I found that the rewards they offer are crappy and the ones whose products do not perform well in the market.
4. Annual Fees
The card that I use does not charge any annual fees (Rakbank). But majority of the credit card companies charge a humungous amount as a part of the annual fees. Keep away from them as much as you would like. Increase and decrease of the fees is entirely upto the banks.
There are umpteen other traps that the credit card companies lay. I will ponder over them in future posts.