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Here is some information about credit cards that consumers may not be aware of. The negatives of cashless payment modes might just be obscure to some or all of them. Those Teaser Rates Interest charges vary from one card issuer to another. There are so-called “teaser” rates that can attract you to have one card over another. But it is important to note that these rates only apply when the cardholder pays ON TIME. Some cards advertise “Zero” interest rates. But that only applies with certain purchases that can be amortized over a short period, like six months or less. But if the cardholder elects to go beyond that, higher interest rates will apply. In the US, there are no federal laws limiting interest or late payment fees and consumers could be paying as much as 40% per annum on them. States like South Dakota don’t have interest rate ceilings while others like Delaware have weak anti-usury laws. Those advertised teaser rates won’t apply if the consumer is late in payments which incur higher rates apply retroactively and on the entire transaction amount even if part of it has already been paid earlier. ATM Cash Advances They’re cash withdrawals via ATMs and often referred to as Cash Advances by credit issuers. Those teaser rates never apply to ATM withdrawals. Cash advances against the credit limit are charged interest rates higher than on purchases. And this is on top of the cash advance fees that often have a floor limit or a percentage of the cash, whichever is higher. Moreover, the interest on cash advances is more commonly levied from the date the withdrawal is made, rather than the start of the billing cycle for common purchases. Many card issuers also charge a surcharge for cash withdrawals, even if the ATM machine used is owned by the same bank issuing the card. It’s curious to note that card issuers apply payments to purchases before cash advances. That’s because cash advances carry higher interest rates, ensuring that cardholders who pay the minimum monthly charges end up with their cash advance balances far longer even if they pay off their statements regularly on time. Payment Allotment The principle has always been to apply payments first on credits with lower interests. Should the cardholder have a balance transfer advertised at only 2% while having other transactions like merchant purchases levied at a higher rate, payments are allotted first to the one with the lower interest rate. That essentially ensures that the card holder will suffer paying the amount with the higher interest rates longer. Credit Card Customer Categories Customers who don’t pay the full the amount owed on their credit card statement by the due date are called “revolvers” who will be paying interest until they finish off payment the whole amount. Those who pay in full are known in the industry as "transactors," "deadbeaters", or "convenience users". Those who regularly transfer balances from one card to another with the lesser interest rates are known in the industry as "rate surfers", "rate tarts" or "gamers."
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