Credit card holders are familiar with grace periods offered to them for making repayments for the purchases they have made using credit cards. Grace period is one of the biggest advantages for the credit card holder in making purchases of services or products from authorized dealers or merchant outlets. Of course, credit card holders also find credit card deals quite beneficial from the consumer point of view.
They find credit card deals working in their interests when making purhases. They also find credit cards deals in transfer of balance amounts from one credit card to another. They can compare credit cards for these best deals and offers. They can also compare credit cards for other premium services offered. They can compare credit cards for the rate of interest and the grace period available.
Yet, these deals somehow become unfavorable for the customers, when they fail to make repayments on time. Credit card companies offer discounts on deals of certain products and services because they intend to increase the use of the credit cards among the customers. The high use of credit cards works in the interest of the credit card companies. If customers tend to spend a lot using credit cards, there are also better chances that repayments within the interest-free period are less. Once the interest-free period ends, the credit card companies almost get a free hand to play around with interest rates as well as other finance charges associated with the credit card transactions.
The interest rates are also not fixed uniformly for all credit card companies and even among all the credit card holders. In fact, credit card companies have their own mechanism to fix the rate of interest for each category of the credit card they provide to customers. Each category of the credit card, whether it is premium, gold, silver or the normal one, has its own form of interest rate and other finance charges.
The category of the credit card holder depends upon his income-level. The credit card company makes an assessment of the credit card holder’s financial credibility before extending the credit card. If the financial credibility of the credit card applicant is up to a certain score, this score is matched up with the category of the credit card to be given and then, it is provided. Over time, the category of the credit card can be upgraded after the credit card company gets proof of a better income of the credit card holder.
All credit card companies offer grace periods. The grace periods can be from 30 days to 50 days from the date of the purchase of the product or service. These grace periods are entirely interest-free and if the credit card holder makes all the repayment of the amount he used for purchasing the product or service, then there is no extra interest he has to pay for it. But if he pays only part of that payment or even makes a late payment, then he has to pay extra interest or he is even liable to be penalized by the bank.