There are several different features to a credit card according to which they are mostly divided into standard, premium, limited use and business credit cards. There are other categories of credit card as well such as balance transfer credit cards, departmental credit cards, secured credit cards etc. What distinguishes one kind of credit card from another is the features that is available on it. Listed below are some of the common features of a credit card that the consumer should pay attention to before signing up. The presence or absence of few particular features on a credit card may be the difference between the right and wrong choice of a credit card for the consumer.
· Credit Limit — credit limit is the maximum amount of money that you are able to charge you credit card. The credit limit in any particular month includes any previous balance that you may be carrying from the prior month as well as finance charges, fees, cash advances, balance transfers and purchases. When the credit limit of a credit card is exceeded the credit card issuer charges an extra charge to the consumer. He may also increase the interest rate or cancel the credit card altogether.
· Balance — the balance on a credit card is the total of the money that you are due to pay the credit card issuer in any given cycle and includes purchases, finance charges and other fee. High credit card balance increases credit utilization and lowers your credit score. Most credit cards allow the balance to be rotated from one month to another by paying at least the minimum due and charging interest on the balance.
· Annual Percentage Rate — the annual percentage rate aka APR is the interest rate that is applied it to a balance which is being revolve from one month to another. A single credit card can have different annual percentage rate is a different kind of balances such as a different rate for balance transfer whereas another for cash advances. The annual percentage rate can be increased by the credit card issuer under certain conditions such as being late on a payment, going over the credit limit etc. A clause known as universal default allows all your creditors to increase their interest rate if you are late on one of your credit cards, if this clause is included in your agreement with the credit card issuer.
· Grace Period — grace period is the amount of time between the day that the bill for the credit card is generated and the due date by which you are supposed to make the payment. The grace period usually ranges from 10 to 15 days. Certain castes do not allow a grace period for new transactions when you are already carrying a balance on the previous month. In such cases the purchase will begin to accrue an interest from the day that they are made. Features like balance transfer, cash advances and installment payments typically do not have a grace period and the interest is applied right way. In order to determine what the grace period on your credit card is you should check your billing statement and see the difference between the date of the generation of the Bill and the due date.
· Finance Charges — franchises are the sum total of interest and other fees levied by the credit card issuer or carrying a balance from one month to another. Match as a computed using a balance and annual percentage rate.
· Incentives and Bonuses — several premium cards such as gold, pattern and titanium credit cards offer features like cash back and rewards for using their credit card. They also offer special offers of discounts and seems on shopping in a particular sector or store. Specialized credit cards such as one issued by an airline will reward you with one is air miles every time you use a credit card. These air miles can then be redeemed with the airline whenever you purchase your next booking with them.