Top 5 Credit Card Questions
Posted by main on June 22nd, 2015
1. Why should I use a credit card instead of cash?
A credit card gives you the peace of mind that if you have a dispute with your merchant, you always have your bank as the middle man to try and solve the dispute. That doesn’t happen when you pay with cash. In addition, some credit cards offer car rental insurance as part of the terms of agreement within your account, so you might save just by paying with your credit card.
2. Why did they charge me interest if I paid my balance in full?
We get this question a lot. The answer is that the credit card companies charge interest on your revolving balance on a daily basis. So if you paid off your credit card today, and had a balance for the previous month, you will be charged interest for the time you had a balance only. Meaning, if you balance on April 1st was $1000 and on April 30th you paid it down to zero, the bank will still charge you interest for the preceding 29 days that there was a balance.
3. Will my promo rate be rescinded if I am late one time?
Some banks will give you a one-time freebie when it comes to late payments and not rescind the promo you received for a balance transfer, and if you’re late again, it defaults to their standard APR, which could be a lot. On the other hand, some bank will absolutely not give you that one-time freebie courtesy and will increase the APR to their standard if you are late even one day. So be careful and be on the look out for those statements.
4. Which bank is offering the best rewards?
This changes daily and depends on if you are inquiring about a personal card or business card. American Express has great rewards program and as an added bonus, American Express links your personal and business cards to the same rewards program. Capital One has a new program that was just released alongside UBER that gives you two free rides + 20% cash back until 04/30/2016. If you are a frequent user of UBER, this could potentially add up to hundreds of dollars in annual savings.
5. Why isn’t my limit increasing on my account?
The answer to this could be a myriad of things.
a) Your credit score is the same or lower than that which you were approved for this particular card. Meaning, if you applied for a Discover card when you had a 700 score and were approved for a $4000 limit, if your score stays stagnant or drops to below that threshold, Discover will not increase your limit. On the other hand, if you may timely payments and your credit score increased to above 700, the likelihood of Discover increasing your credit limit is very high.
b) You are utilizing too many credit cards. Bank view this as “over leveraging” and are actually helping the consumer by not extending them more credit that is not justified.
c) Your score increased, but you habitually pay a few days after the due date. Banks view this as being irresponsible, and typically do not want to extend additional credit and have that extra liability in the event of a default. In fact, some banks actually shut down the credit card account if a consumer is habitually late or spends over the limit.