Credit cards are some of the convenient ways that allow a customer to shop, and that is a helping tool for an individual who is dealing with an emergency or any other critical situation. However, if not careful credit cards can be a tool through which one can fall trap to credit debt that can crush the financial backbone of a person.
One must consider that credit cards are a double-edged sword, and one who uses them by knowing the dark patterns of the tool has a better chance of navigating through the maze and gaining actual benefits.
A DSA partner app can help a person choose a credit card that is beneficial for them. This allows cardholders to protect their financial health and use the card for a real cause.
In this blog, we will learn about some of the dark patterns that a credit card company uses to gain an advantage over customer’s ignorance and squeeze some extra profits for the company.
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High-Interest Rates on the Credit Utilized
When it comes to credit cards, the first thing that comes to mind is that one doesn’t need to pay the bill immediately. It somehow gets into the psychological setup where a person feels that they can make the purchases as they wish and can max out the card.
However, when the bill arrives, one can feel the burden of their careless utilization of credit cards and how it has affected their overall financial health. For example, a person who is using a credit card faces an issue and misses the credit bill payment, which will create havoc on their finances.
The high interest rate of 25%-30% will be immediately levied on the total outstanding amount, and the more a person delays making the payment, the more troublesome it will become for them to cover the entire bill.
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The Secret of Hidden Fees
Multiple fees are applied by a credit card company to make extra money from transactions or changes in the card’s features. For example, there are late fees, over-limit spending fees, transaction fees, and balance transfer fees. All these things result in hidden fees that a person can witness during the billing period.
The small changes that one can see might seem insignificant, but when one adds up the entire year, one can feel the mammoth fees they have paid to the credit card companies unnecessarily.
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The Lure of Minimum Payments
Minimum payments are the trap that credit card companies play to ensure that they don’t have to make the full payment and get them into a financial burden. A person might make a habit of choosing a credit card option and choose the bill payment through an EMI option. Then, immediately, the remaining account will be counted as a loan, and a significant interest will be levied on that amount.
Here, one can take the help of a DSA, and through them one can understand why it’s not a good choice to have a card that charges high on EMI. A DSA’s full form is a Direct Selling Agent, and they are the ones who can choose the right credit card that puts less interest on the EMI payments.
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Costly Reward Programs
Credit card companies proudly advertise reward programs and reward customers for getting something for free. However, when a customer is seeking a reward, the end goal of the credit card company is to purchase a larger amount, and through that, one can get a reduction in the form of a discount.
On the other hand, the reward points can get devalued if a person doesn’t use those points immediately, which makes an individual purchase some item that one could’ve avoided otherwise.
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Lending Practices Targeting the Vulnerable
Finally, credit card companies also target individuals with low credit scores and make their situation worse by offering them unfavorable credit card options that will make them struggle financially.
A person who finds different ways to arrange for funds will keep the credit card company rolling and that will make the person fall into more debt.
Thus, knowing these practices of a credit card company will allow a customer to behave more maturely, making comfortable payments, which will allow a person to take advantage of the true benefits of credit cards.
