Understanding the ins and outs of credit cards is not easy. Teaser rates, hidden fees and fine print can make it hard to select a card that offers good value. If you know what to look for, there are plenty of reliable credit cards that stay clear of hidden fees and ballooning interest rates. A recent study by J.D. Power estimates that one in five credit card customers are carrying the wrong card. It can be hard to navigate through all of the options in the market, so here are four common credit card mistakes you can easily avoid:
1. Teaser rates
You’ve likely received 0% APR offers. On the surface, it seems like a good deal. However, the 0% APR is only introductory, so the rate usually increases dramatically long before you get a chance to pay off your balance.
In addition, many consumers don’t realize that their APR can change based on the type of transaction. For instance, there may be a relatively low rate on purchases, a higher rate on balance transfers and an even higher rate on cash advances. Many card issuers even charge an outrageous penalty rate for late payments. Our Visa Platinum Rewards card offers one low rate for all transactions.
2. High fees
Many card issuers, particularly those that offer rewards programs, offset their costs by charging an annual fee to consumers. These typically range between $50 – $150. Some elite cards, like the Black Card and American Express offer special perks including concierge service, airport lounge access and other high-end benefits. However, these cards come with an annual fee of $450 or more, a hefty sum to pay for the privilege of carrying a prestigious card.
Another common pitfall is a balance transfer fee, typically 3% to 5% of the transfer amount, which can quickly cancel out any savings. A balance transfer of $5,000 could cost as much as $250.
Many companies also charge a cash advance fee, often 3% to 5% on top of the current APR, and they’ve been on the rise. Cash advance fees are 66% higher today than they were in 2012, according to a study by WalletHub. Our Visa Platinum Rewards card doesn’t charge balance transfer or cash advance fees.
3. Limited rewards
Everyone likes to be rewarded for being a loyal customer, but many rewards programs are branded by a specific hotel, airline or entertainment destination. J.D. Power estimates that 44% of airline card consumers are in the wrong card, often because they aren’t spending enough on their card to earn enough points to cover their annual fee. Or, they haven’t used the airline benefits they have accrued in the previous 12 months. Unless you always use the same hotel, airline or go to the same place for all of your vacations, look for a program that offers flexible rewards. Our reward program offers multiple airlines, hotels, cruises, and vacation packages, as well as a large selection of brand-name merchandise. Cards with more flexible rewards programs are better options for most consumers.
4. Poor security features
Twenty-seven percent of Americans had their credit card information stolen in 2016, according to Gallup. Those who have been victims of credit card identity theft have collectively lost millions of dollars. To avoid becoming a victim, make sure to find a card that offers security features like purchase and fraud alerts. In addition, Visa Checkout offers secure online purchases that allow consumers to enter a username and password instead of entering their credit card information at online merchants.
Chip card technology is also important. Chip cards use unique encryption for each transaction which helps prevent against fraudulent use. Instead of holding all your card information in the swipe—including your card number, expiration date and PIN—a chip card encodes each transaction, so that fraudsters can’t recreate and use your card information.
Before you apply for a credit card, carefully examine the rates, fees, rewards and security services provided. You’ll find that our card is hard to beat!