Credit Card Basics
A credit card is a thing to behold. When you don`t have one and aspire to become part of the crowd that swipes, there are things you need to know. Firstly and most importantly, the credit card is only for those with the discipline to manage it. This means that when you buy something on credit, the item is not yet paid for. It will appear on your statement at the end of the month and then payment should be made, preferably in full but at the very least, the minimum amount.
If you chose to pay the minimum amount only, you will pay interest on the balance and that is not exactly how you should be allocating your hard-earned cash. Many credit cards have annual fees. Remember that fact when you decide to apply for one. If you were not really going to use your card it would not make sense to pay the fees.
When you apply for a credit card, the most important thing that you must have is a good credit rating. Poor credit score = no credit card. So, take care of your finances and manage them carefully.
You must also be over the age of 18 before you will be considered for a card. The credit card issuers also require a certain minimum income amount before you will qualify for a card.
Once you have your card it will be necessary to handle it with care. If you lose your card or it gets stolen, charges can pile up and you will be responsible for it. As an alternative you can take out card protection insurance, albeit at a small fee.
Do not under any circumstances allow other people to use your card. This is one card that you want to control yourself. So, keep the card to yourself and do not make the number known to your friends, not even in an emergency or on a rare and special occasion.
Student credit cards are available for those of you who are still studying. Go online and read up about the benefits and costs involved. Many cards offer cash back or rewards when you shop at selected retailers. These awards can be redeemed the next time you shop or you can keep the rewards to use for a bigger purchase sometime in the future.
Even if it is a drag, it makes sense to read the fine print. Consultants or online sites tell you the essence of what you need to know but it will be to your advantage if you start to read all documents pertaining to financial matters carefully. Ask questions – you have a right to know.
The world economy is in dire straits at the moment and every one of us is watching our finances. Take care to make the right choice with regard to your first credit card and make sure to protect it as well as your credit.
Even if you are considering going to the institution where your other account(s) are held and asking them for a credit card, you should also look at what else is available, such as the Virgin credit card.
What’s Right For You? Choose A Credit Card That Suits You Best
Choosing the right credit card that is most suitable for your needs will take a little work, but it certainly will prove to be worthwhile in the long run. Whether you want it so that you don’t have to carry cash with you, or you are a businessperson who is looking to have an accurate record of all business-related expenses, there will usually be one card that is a little more beneficial to your situation than others. Here are some things to look for to help you get that perfect credit card.
Determine Your Primary Use of The Credit Card
Probably the most important question to ask up front is what do you want to use your credit card for most? This should largely determine what kind of card you need to look for. For instance, if you are in business for yourself, or if you travel a lot for your business, then there are a couple of cards that will really help you save some money.
If you fly a lot, then go for a credit card that will give you a lot of air miles up front, and will also give you a lot of options that you can use the points for. It should also have an option of allowing your points to be used for hotel rooms and possibly car rentals.
If you drive a lot, then go for a gas card that gives you rebates on your gasoline, and make sure your points can go toward car rentals, or towards a new car. There are also business credit cards that will not only help you with these things, but will also allow you to use your points toward the purchase of new office equipment and other similar things that every business needs.
On the other hand, if you are a student, or a mother just wanting to use it for more simple expenditures, like gas, food, prescriptions, and some pizza money, then you just want a regular card that will reward you for these type of expenditures. On these items, you can expect to get up to 3% rebate, possibly more on other types of purchases. Many cards may only give you 1% of a rebate, but by looking around, you can get the 3%.
Needs For Debt Consolidation?
If you have found yourself getting in debt pretty deeply from credit cards, then you can use a new credit card to actually help you eliminate some of the debt. Here’s how. Get a 0% APR interest credit card that will give you the opportunity to have balances transferred to it – but make sure that there is not any balance transfer fees.
Many credit cards have these fees, but there are just as many that do not have them. Why pay for it when you can get this option for free from someone else? You also want to be sure that the introductory benefits last for at least one year – some only last for three months. Then, if you still have debt on this card, be sure to get yourself another card before the year expires, and give yourself another year of 0% APR interest on it.
Getting The Most Benefits From Your Credit Card
No matter what benefits you have attached to your credit card, you will not enjoy much of them unless you do two things. The first thing that you need to be sure to do is to pay your credit card bills on time so that you do not pay the monthly late fees. Being late even once with some credit card companies is all the excuse they need to charge you the full amount of interest – from that point on. A second thing is to pay off the bill in full each month – in order to avoid the interest charges – after the introductory period expires.
Establish A Good Credit Rating
With something as simple as too much debt owed on a credit card, many people have wiped out the possibility of buying some of the bigger items they may really want – like that nice house that they have dreamed of for so long. The best credit card will also help you to build up, maintain, or repair your credit rating, too – if it is used wisely.
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Credit Or Debit Card?
More and more people are switching from cheque and cash payments to using plastic to buy items such as groceries, home appliances and clothing. The question is whether we should be using a credit card, debit card or a combination of both to buy the things we need. Both have their own benefits, and if used in the correct way, you could save money and even get protection on items of value.
Both types of plastic card can work in a very similar way. Whether you buy some essentials at the local shop, book a flight online or pay for meal at a restaurant, you’ll either key in a pin number on a card reader or type the card details onto a website. The real difference between credit and debit cards is where the money comes from and what happens after you use it to pay for something.
Using a credit card is similar to having a loan, except the money you use is not paid to your bank account on in the form of a cheque, but taken from a credit card account with an agreed maximum spending limit. You may also have to pay a fee when you use your credit card for paying for certain items such as flights or tickets, but most of the time it won’t cost you anything extra. The real cost will be in the interest the credit card company earns by charging you an annual percentage rate for the money you use. However if you repay your credit card balance on time every month, you can avoid paying interest on the debt. When you compare credit cards, you will often find that introductory rates of interest can be very low or even zero for the first few months.
A debit card is simply a form of electronic cash, and when used it draws money directly from the bank or building society account it is linked to. If you don’t have the money available to spend in the account, or have exceeded the overdraft limit on your account, then your bank can refuse to honour the payment. Having a debit card to pay for things means that you can keep control of the money you have and avoid overspending or getting into debt.
For people who don’t like to be in debt or want to avoid the risk of not being able to pay the money back on time and incurring an interest charge, a debit card is worth considering over a credit card. But a debit card will not usually come with the same kind of benefits as credit card. Many credit card companies now offer protection on the purchase of goods, cashback, travel insurance and special discounts on goods and services. Debit cards do not always offer this purchase protection policy, so if you order goods online with a debit card and they do not arrive or are faulty, it may be difficult to claim a refund on the charge.
Many people choose to use both forms of card. Even if you are not likely to use the credit card, people find that they can be useful when they need to make a payment and may not have enough to cover it in their debit card bank account. Sensible and thoughtful use of both cards is always recommended, and with credit cards especially, by shopping around you can find that deals and interest rates can vary significantly. So there is always the possibility of making some good savings by comparing prices.
About the Author: Mark Bartley. Mark has provided help on all kinds of financial and home-related services including why you should compare car insurance quotesbefore deciding or why it’s advisable to compare home insurance quotes before selecting a policy.Add Us!
