Facts about Credit Cards
That powerful plastic that you wave to sales ladies when shopping for just about anything you want is what you call credit card. This is one type of a payment system provided by banks and other financial institutions to be issued to clients and consumers based on their credit history. Credit card issuers will grant the card holder a certain limit which they can use as they please and pay back on a monthly basis. Almost all the most important establishments are accepting all types of credit cards. It is therefore a great replacement for cash since carrying them may not be as safe as just buying with your cards.
Credit cards allow its holder to revolve the amount assigned to the card. Thus, it differs from a charge card where the whole amount has to be paid by the end of the month. With the credit card, you may choose to pay the whole amount you charged to it upon billing period or just the minimum amount due which will result into the charging of interest rates or APR (Annual Percentage Rate). APR is the interest rate applied to the amount you charge to your card. Each credit card type may charge different APRs. Most of them try to offer the most attractive rates so as to convince people to get their credit cards. People apply for credit cards for many reasons. One of them is to build a credit record or history. This is an important factor in seeking other loans such as a car loan or a real estate mortgage. Even if you have the money to pay cash, you will benefit in using credit cards since you will be able to how an impeccable credit history when the need arise. Just make sure you keep your record clean.
While there are many advantages to using a credit card, there is also downside to it. Credit cards tend to be a form of temptation especially to those who have little self-control and end up mixing out their cards without any sure source of money to pay it with. This problem has been in existence for a long time already and many people have become victim to this with many going bankrupt. To help you in using your credit card wisely and prevent it from being a burden instead of a financial help, you may choose to follow the following tips:
- Apply for only one or two credit cards for your use.
- Use your card wisely by asking yourself before making any purchase if what you will purchase is something necessary or does it have to be bought now? Another very important information you have to know before any purchase is whether or not you have the money to repay it? Also consider how long you will be able to re pay the amount you will charge to the card since it is through knowing that you will be able to compute how much you will ultimately be paying. Once you know, determine if it is worth it or the amount ends up being too big.
- Be sure that the amount you will pay monthly for your credit card bills will not be more than20% of your monthly wage.
- Before you apply for a card, shop around first and compare the various cards offered in the market. After doing so, you choose the one with the lowest APR and annual fees and those that offer longer grace periods before the application of financial charges. There are cards that offer zero annual fees and zero APR for a certain period. That would be the better choice.
- It is advisable to pay the full balance of the card but if it is not possible, it would be best to pay more than the minimum amount due.
If you will stick to some of these advices, you will be able to make you card useful to you.
Scrutinizing the Credit Card Balance Transfer Feature
Credit cards are commonly used by individuals for many reasons such as medical and emergency expenses, building credit history, for the prestige of owning several cards, to make it unnecessary to bring cash and many other reasons. The reason for heavy card debt could also be plenty, e.g., poor financial management, sudden lost of job, hospital and emergency expenses, etc. It may surprise you to know that if the payments you make on your card bills will be limited only to the minimum amount at a minimum 16% APR, you will end up paying double the original amount over 30 years. This is why the balance transfer feature being offered by many credit card companies has become an attractive alternative to many cardholders.
One attraction of many of the card companies today is their credit card balance transfer feature that serves as a chance for cardholders to restructure the card debts they already have at a lower interest rate. Credit cards try to outdo each other in terms of the APR or the Annual Percentage Rate. Some even offer a free balance transfer fee. This fee is something you will normally be charged with if you will transfer your card balance to them. Credit card balance transfer interest rates range from as low as 11% per year to 16% per year. There are currently many card issuers that are offering 0% balance transfer rate. This would be the most ideal type of card to apply for. However, it is very important to scrutinize well what are indicated in the policy of the card when it comes to this feature. You should be able to read the fine print and avoid unnecessary charges that you may come across with if you are not careful with your card account.
Some people may not know it but most of the balance transfer features, if not all of them, will charge you the standard rate on your card balance if you will be late in your payment. If you applied for balance transfer at 11% APR and be late in your monthly due, you will be reverted back to the default rate of let us say 30% APR. This happens to many people because they are not aware that such agreements occur when you apply for their balance transfer feature. This will just bring you back to your original situation.
Another point of consideration is the earlier mentioned balance transfer fee. There are now many cards that offer this for free. That would be your best choice. When getting another card for the balance transfer feature, be sure to stop using the other card where you transferred the balance from. Doing so will only burden you with bigger debts that will be harder to manage. Likewise, you should make sure to pay your bills on time or suffer bigger interest rates that could affect your credit rating. To acquire a credit card with this feature, you can either ask through phone or inquire from the internet. It is through the internet will you be able to compare different credit card features and decide which one can offer you the best rates.