Credit cards, being an everyday payment tool, can be found in the wallet of almost every American. The choice of cards is great and each consumer is eager to find the most beneficial credit card for his budget. What's more: banks introduce more and more new credit card deals, adding new features and making the products look more attractive. A thoughtful consumer seeing the fierce promotion of the new cards' benefits, can ask the question: How do banks really make their money?
There will be no discovery to you, if I say: Visa, Discover, American Express and others make their living through fees and charges they take from their customers!
Credit card fees are a standard feature, however, annual fee is quite rare today, especially with plastics for good and excellent score.
Regular credit card users and those who are late with payments are the main source of the banks revenues. Besides, there are several other ingenious ways credit card companies use to make more bucks.
Minimizing grace period
The traditional grace period of 25 days is in the past now! Often reduced to 20 days, grace period now leaves fewer chances for you to pay off your balance at zero interest.
Practicing the daily periodic rate
In the old kind past banks used to calculate the charges for the balance you carry according to the monthly periodic rate. It was as simple as the following: the APR was divided into 12 parts (the number of months in a year) and multiplied by the monthly balance. These days are gone forever! Since instant approval card deals appeared, it has become more convenient for the credit companies to divide the APR into the 365 days of the year and multiply the result by the daily balance. The charges became higher, indeed!
Sudden APR Increase
Even if you make your payments, the bank can increase the interest rate as universal default clause. It can happen if you miss a payment for another loan or a credit card in another bank!
Late fees increase
Banks have a great habit of increasing late payment fees without warning. Be careful and pay everything on time!
Take our warnings into consideration and be always on your watch to leave banks no opportunity to earn unfair revenues on you!
