There are a few essential terminologies related to credit cards that are useful to keep in mind. The phrase ‘Annual Percentage Rate’ (APR) is among the most popular and crucial ones you’re likely to come across. This sets the cost of borrowing with your card. You will be charged the annual percentage rate of interest if you carry a balance. It frequently changes from card to card.
For instance, you might have a card with an APR of 9.99%, or you may get a 14.99% APR credit card. Credit card companies use your credit score when determining your APR. The APR on credit cards is frequently variable, which means that it may rise or fall over time. The federal prime rate is one underlying index to which variable APRs are linked. Your card’s APR will rise if the prime rate rises, and vice versa if the prime rate falls. There are several ways to unlock your credit card’s potential reward savings.
Credit cards are known for having higher interest rates than many other financial products. Some of them offer promotional 0% APR periods during which you can make purchases, make balance transfers, or do both without paying interest. Remember that a 0% APR credit card lacks rewards programs and other incentives. It might not be very useful once the initial period has been over.
Users of credit cards should be aware that these cards frequently feature a variety of APRs. One APR may apply to purchases, another to balance transfers, and one to cash advances. Cash advances don’t have a grace period as purchases do. This is why the interest starts to accrue as soon as you withdraw the money. This is the main reason why credit card companies typically charge a higher APR for them.
How to Unlock Your Potential Reward Savings?
Cardholders accumulate reward points whenever they use their credit cards. The reward points depending on the type of card you have. For instance, a 0% APR credit card will earn a certain type of reward. A credit card with a 14.99% APR will earn different kinds of rewards. The cardholders can swap those points for a variety of choices that the credit card company provides. You can utilize your reward points in any of the methods below, depending on what your credit card company has to offer.
Many financial institutions give their customers access to a catalogue of goods they may exchange for their acquired reward points. These goods fall into categories including apparel, food, footwear, accessories, stationery, etc. It depends on the card type and the card provider’s policies. For instance, the World Plus SuperCard gives access to a set of expensive items. Other credit cards can’t do the same.
Vouchers are one option for redeeming credit card reward points on a number of credit cards. These coupons can be used at various shops that the financial institution might be affiliated with. Lenders occasionally permit clients to use these vouchers for online purchases from a limited number of online merchants. These vouchers can have a value of as much as a few thousand.
Miles is a great alternative for people who are passionate about traveling. Many financial institutions collaborate with airlines or online travel agencies to provide cardholders with travel-related benefits. Although occasionally, cardholders can earn miles for their flights directly from their purchases with their card. Alternatively, the consumer can convert their reward points to air miles. You can use these miles for discounts or free airline tickets in the future.
Additionally, several lenders permit cardholders to donate their reward points. Customers have the option of donating to a certain charity. Reward points will be turned into cash and donated to the cardholder’s preferred charity.
Cashback is another choice for repurchasing reward points. The customer will receive a portion of their purchase price back in cash instead of points for a transaction.
- Other Options
Lenders give clients a few more possibilities as part of their incentive redemption program. These include rewards for buying fuel, enrolling in programs or training, using specialist services, and spending money on entertainment. Cardholders can also use their reward points to get discounts on travel arrangements, hotel stays, and other purchases. Customers can utilize their reward points to make purchases at a store which the lender has a partnership with.
You automatically accrue reward points on your credit card. The cardholder does not need to take any further action to earn these points. You receive reward points each time your card is used to make a purchase. Usually, the cardholder receives one point for every Rs 100 to Rs 250 charged on the credit card. Additionally, the value of your purchase affects how many points you receive and vice versa.
However, the type of card you have and the financial institution that issued it will determine how many points you get with each purchase. For instance, co-branded cards like the Bajaj Finserv RBL Bank Credit Card will earn you more points than a standard card.