Need a Credit Card?
The emergence of the electronic age made almost everything more possible. Diagnosing and curing previously terminal illnesses became widespread; travelling to uncharted territories became a possibility and most of all, people’s everyday lives was made easier by technology. We now have more convenient stores, more comfortable means of transportation and a range of labour-saving gadgets that makes work and pleasure almost effortless.
When it comes to the technology of finance, an efficient banking system and efficient services have given people better alternatives and options with which to manage their finances. Among the so many financial management schemes that emerged, one stands out above the rest – the credit card.
Credit cards, especially to working people and those who live very busy lives, have become the ultimate financial saviour. More than being an important status symbol or an accoutrement of expensive purses and wallets, credit cards have revolutionized the ways people have to spend their money.
But, more than the glamour and the convenience credit cards bring, there is much more to these bank cards than most people could ever imagine.
Credit Card 101: Before entering into the very long list of the pros and cons of using a credit card, it is quite important for people to realize just what a credit card really is, in order for them to maximize its potential.
In layman’s terms, a credit card is a device that allows a person to make purchases up to the limit set by the card issuer. One must then pay off the balance in installments with interest. Usually, credit card payments are per month and range from the minimum amount set by the bank to the entire outstanding balance. And since it is a form of business, the longer the credit card holder waits to pay off his or her entire balance, the more interest piles up.
Since having a credit card is a responsibility, only those people who are of legal age and have the ability to pay off the amount they are going to spend through their credit card, is allowed to have one. Actually, most of the adults in the U.S. use credit cards on a regular basis, because it is so convenient compared to carrying cash or cheques every time they have to buy something.
It is just as important to be familiar with the various kinds of credit cards before you begin to build up credit card debt in order to avoid having huge debt. Since credit cards are indispensable to most of their users, it is necessary that they understand the types of card that include charge cards, bankcards, retail cards, gold cards and secured cards. All of these types of cards come with one or two interest rate options: fixed and variable rates.
If you decide to have a fixed-rate credit card, the interest rate remains the same, compared to variable rate cards where the rate is subject to change depending on the credit card issuer’s discretion. Fixed-rate cards usually carry higher interest rates.
Basically, credit card issuers offer three types of accounts with basic account agreements like the ‘revolving agreement’ a.k.a. the ‘Typical Credit Card Account’ which allow the user to pay in full monthly or prefer to have partial payments based on the outstanding balance.
Whereas the ‘Charge Agreement’ requires the credit card users to pay back the full balance every month so that they won’t have to pay any interest charges. The Installment Agreement, however, asks the payer to agree to a contract to repay a fixed amount of credit in equal payments over definite periods of time.
Another category of credit card account includes the individual and joint accounts where the former requires the individual alone to repay the debt and the latter requires the partners to pay together.
Now that you have some understanding of how many kinds of credit cards there exist, it is time to review your goals before applying for one. Some of the facts you should think about is how you will use the credit card. If you intend to carry a balance at the end of the month, how much are you want to pay in annual fees, if you have a strong credit history and if your credit in need of repair.
Once you have a reasonable idea of what you are looking for choose the right credit card for you by looking for the information you need. You can also review the credit cards you’ve researched and compare them.
Are you shopping for a credit card? Regardless of the type of credit card you decide on, be certain to discuss your specific financial needs with your financial advisor or accountant before applying for any credit card. It is necessary that you know the benefits of having a credit card like safety, valuable consumer protections under the law, and the accessibility and availability of services.
Although having a credit card is perceived as being synonymous with financial security, this may also trigger a person’s thirst for material things and may lead to the temptation to buy something they don’t really need. A credit card bearer should always have in mind that having a credit card is a big responsibility. If they don’t use it carefully, these may owe more than they can repay. It can also damage their credit status report, and create credit repair problems that are quite difficult to put right.
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