Three Credit Card Benefits to Stay Away From
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- ATM Withdraws
Many consumers get lured into thinking the card is pulling from their actual saving or checking, but it is not. The funds are being taken in the form of a loan. Using this withdraw method with a credit card is actually putting a person into credit card debt. You must also take into account, the fee's you will have to pay, if you use an ATM machine that is not connected to the credit card you use.This benefit is a huge profit maker for the credit card companies. They get to collect on fees and interest on increasing balances. Is it really worth paying high interest rates and fees associated with this perk, in return for quick cash? In the long run, most people using this service are only going to build on debt problems and potentially help to put them into serious financial trouble.
- Balance Protection Insurance
The credit card companies push this service as a way a person can protect oneself against an unforeseen difficulty. They make claims that it will help pay credit card bills in the event of lost employment, disability, become critically ill or accidental death. The catch comes with the method of charging for this.They typically charge for this protection service based on the credit card balance. There is generally a specific percentage of the card balance that becomes the fee for the service. The more debt you have on the card, the higher the rate they will charge you for this insurance. Also, keep in mind, the protection only covers the minimum payment on the card based on the contract terms.
- Convenience Checks
Almost every time you open mail from any of the credit card providers, you will see convenience checks being pushed as a way to get quick cash. This is one of the most popular "benefits" the credit card companies will market. The reality of this fast cash is, they are just another way to get people to accept cash advances. They tend to have the highest interest rates of all the services offered by card issuers.There is almost no limit to what they can charge for the convenient check services. They almost always have a minimum charge, but place no cap of the fees. The interest rates have been found as high as 25%. Convenience checks do not offers a grace period to avoid interest charges. They begin charging interest immediately after the check has been cashed.
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