Financial decisions and management are the most difficult ones. There are plenty of pros and cons that you need to address. For instance, the Penalty APR's would hugely result in financial stress on the budget. Do you want to stay away from this? If yes, you should start by knowing what this is all about and the causes behind it.
Do you have a penalty APR on Credit card?Have you made a payment with a delay of sixty days? If yes, then you will face a penalty APR. It is way more an APR that applies to your future and present balances. When you make a sixty-day late payment, you incur an APR in your account. You can avoid it easily. You need to stay on top of all your bills.
But what's the reason that credit cards charge penalty APR's? You must be wondering about that. If there's a late payment made by you, then the credit card issuing company will take an added risk that the user might not pay altogether. The credit card companies resort to the APR penalties as a medium to stay away from this risk. It's done to motivate the cardholders to make timely payment a practice. In that case, there's going to be no hidden fees and no penalty APR.
How does the penalty APR function?Your penalty APR can be 29.999% and even higher! But usually, it’s lower based on the credit card. The increased rate might apply to both the future buys and present balance, once you are done with the sixty-day late payment or take more days’ time. It’s applicable if the users commit another action enabling penalty APR based on the credit card agreement. It comprises recording more than the credit limit or when a cheque gets returned.
If more than one or just one late payment leads to penalty APR, it’s essential that the credit card company alert you on the same. You also need to keep in mind that, a penalty APR might erase all the introductory 0% APR offer on the balance transfer or purchases. It takes place in addition to the daily interest rate of the card.
The best five tips for averting the penalty APR’sSeveral cards enable you to correct your penalty APR on the future buys. It takes place six months after the on-time payments get cleared. However, it's ideal that you don't pay the penalty APR in the first place. The five tips discussed below can make that happen.
Get into a negotiation with your lenderDo you feel that you will be late for the future credit card payment? If yes, then you can call the credit card company before the payment date. Check if you do something about it. There are times when it will help you minimise the penalties, allow you to skip one payment or merely assist in creating a payment schedule.
Merely asking won’t get the job done. It generally is best when you make your payments on time. But if on the other hand, you are missing the payments frequently, then the credit card companies might be less generous on you the next time you require any alternative solutions.
Make sure you know all about your credit card agreementBeing an updated customer is essential. For this, you certainly need to read most of your credit card agreement. You have a chosen section allotted to the disclosures that highlight what the penalty APR will be. You also get to know when the APR will be applicable.
You need to maintain your credit card statementsWant a way to stop making a late payment? Keep reading each statement that you get. Pay them right after you go through the same. Also, you can make a credit card statement lists that you can get every month. You also need to check off every cash statement after it arrives.
Keep a check on this list on a daily basis, to ensure that you don't lose any statement. You could also set up an auto-pay system from the credit card. It would ensure that all your dues get cleared gradually on time, and you don’t need to run into any penalties.
Always ensure that your credit card balance is deficientMore charges in your credit card will lead to increased minimum payments. At times, those minimum payments come up till such time you can’t afford them any further. It results in late fees. Make sure that your credit card balance is always low. It should be charging only the expenses that you will be able to afford to pay entirely at one go. It will help to keep your balance at a check.
Try to get a credit card having zero APRDo you want to put an end to all your APR penalty worry? If yes, then you have an easy solution. You can make use of credit cards that don't have a penalty APR. Wondering if these kinds of cards exist? The answer is yes. You merely need to search observantly, and you will get the one designed for your needs. And some of the cards that don't have APR's might have minimal late fees. So, you need to keep up to the date and avoid all these extra payments.
At this point, you might be asking whether the penalty APR’s are forever. After you have made your payments on time, for six months, the credit card companies would lessen the rate on the outstanding balance you need to clear. So now you can be back to your initial rate of interest. It happens because of 2009, the Card Act. However, the company can still have the penalty APR on other expenses.
On the other hand, few credit card companies don't take the benefit of having the penalty APR in future purchases. It will work towards minimising the entire wholesale rate after the six months of on-time payment. However, this is something you must know, but not start to count on it. Instead, you should focus all your attention towards lowering the APR you have been paying.