Credit card advertisements are everywhere these days – Billboards, newspapers, TV, radio, most likely even in your inbox.
Every card provider wants to one-up the competitors with offers, deals and discounts. In such a scenario, wouldn’t it be great if you could just tune out the noise and look beyond the marketing slogans, to understand exactly how the credit card can benefit you.
Souqalmal.com reveals what’s really behind three of the most common credit card marketing hooks.
There’s more to single digit interest rates…
Ever seen a credit card advertisement offering an interest rate of ‘only’ 2.99 per cent? Well, before you get carried away, take a closer look – the seemingly attractive single digit rate is a monthly interest rate.
When converted to APR, an acronym for Annual Percentage Rate, this comes close to a whopping 40 percent yearly.
If you’re not planning to pay off your full outstanding balance by the due date every month, understanding how the interest rate structure works is crucial.
The APR gives a true picture of the annual cost of borrowing with a credit card. It also makes it easier to compare interest rates of credit cards with other loans.
Now if you were to compare a credit card with an interest rate of 40 percent per annum with a non-salary transfer personal loan at 14 per cent annum – the massive difference in the cost of borrowing would be clearly obvious.
That 10% cashback may be more elusive than you think…
Did you score a great deal with the newest cashback credit card in the market? – the one that offers you ‘up to’ 10 per cent cashback on your purchases? Chances are that the shiny billboard advertisement doesn’t paint the whole picture.
First of all, with such a high cashback percentage the spend categories will be limited. There are quite a few credit cards in the market that offer up to 10 percent cashback on spend categories like supermarket, utilities and school fees.
But that doesn’t mean you’ll earn the full 10 per cent cashback on any amount you spend. The credit card provider will also put a cap on the maximum cashback amount that you can potentially earn every month.
Then there will also be a minimum spend requirement for each billing cycle. And what if you accidentally missed making the minimum payment? Would your cashback be forfeited? Be sure to go through the cashback terms and conditions beforehand.
The free round trip with your air miles credit card may have to wait…
Thought your air miles credit card was the cream of the crop? That may not be the case. Let’s say you see two advertisements that both promise you 1 mile for every USD 1 spent – Do they offer the same value? Probably no.
The more important question to ask is – what are these miles worth? While Card A could get you a flight to London for 50,000 miles, you might have to spend 70,000 miles to get the same flight with Card B.
Other restrictions like blackout travel dates, no option to redeem miles for partial payment of travel booking, complicated offline redemption process and more – can also take the fizz out of an air miles credit card’s attractiveness.
Your air miles may also come with an expiry date, so make sure you don’t miss out on using them.
Besides the ones mentioned above, there are many other credit card advertisements that you need to thoroughly investigate before signing up – Zero per cent balance transfer, zero per cent installments, and so on…
Ultimately, it all boils down to the fine print. Credit cards may seem great when advertised with bells and whistles, but take out the trimmings and you will see the card for what it’s truly.
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