To Credit Cards
If you are about to choose one of the thousands of credit
cards available, this complete guide will help you
find the best card to suit your needs and give you the
need to know to make the right decision...
Credit cards used intelligently can enhance your
lifestyle and help you budget effectively, but used
unwisely can cause you sleepless nights and a lot of angst
over how you are going to repay the debt you've run up.
It's hard to imagine doing business today without credit cards.
If you are among the relatively few who do not own a credit card, the chances are good that you have a great deal of difficulty rent a car or reserving a hotel room.
So, just what are these little plastic cards and how do they work?
Let's start by explaining the basics.
What is a Credit Card?
The dictionary defines a credit card as
'A card which can be used to obtain cash, goods or services up to a stipulated credit limit. The supplier is later paid by the credit card company which in due course is reimbursed by the credit card holder who will be charged interest at the end of the credit period if money is still owing.'
In other words, whatever you charge to your credit account has to be paid back within the credit cycle or an interest amount will be applied to the remaining balance.
Advantages and Disadvantages of Credit Cards
The obvious advantage to using a credit card is that it allows you to purchase some goods or services that you may not be able to pay for immediately.
The credit cycle is usually about 30 days (but can be
up to 60 days), and if the money is repaid and your card
balance is reduced to zero in that amount of time, there is no interest attached to the money borrowed.
This sounds good in theory, but the bottom line is that most Americans don't pay off their balances on a monthly basis.
In fact, millions of credit card holders never
pay off their entire balance...this is where some of the disadvantages come into play.
Any amount that isn't paid off within the time of the monthly cycle will be subjected to an interest charge. Depending upon the rate charged by the specific card issuer, that interest rate can be huge.
On top of that, many people will continue to charge things to their card and the balance and interest just continues to grow until they have no hope of ever paying the card off if they just make the minimum required payment.
Chances are that every few days you get a pre-approved credit card application with your name on it.
I've had them sent to me with credit limits pre-approved
for up to $50,000!
Sounds easy, doesn't it?
Well, read the fine print and you'll see that many of these offers come with heavy penalties that can add up to
very high interest rates and annual fees. Remember, these
guys are in the business of separating you from your hard
earned cash...they aren't going to do you any favors.
To get the best possible interest rate with no additional fees, the credit companies will look at your credit history for information. They will check to see that you are responsible with your credit and have paid your bills in a timely manner.
Signs of stability and credit responsibility will go a long way in reducing the amount of interest that card company will charge you. Outstanding loans with late payments and too much available credit will work against you.
Although credit cards can be great in an emergency situation, they can easily get out of hand. Before you apply for one, decide in advance what you plan to use it for.
If used with discretion, they can come in pretty handy
and smooth out life's little cash flow ups and downs
quickly and easily...but you must be in control
We hope this introduction to credit cards has helped
you understand what a card can do for you. The full guide
will be online shortly, so please bookmark this page and
come back often to read our updates...