Credit Card 101

Category: Finance, Credit.

The emergence of electronic age made almost everything possible to people. Everyday life of people is made easy by the technology.

Determining and curing terminal diseases made convenient, reaching uncharted territories became a possibility, and most of all. We now have more convenient stores, easier means of transportation and a variety of gadgets that makes work and pleasure almost effortless. Among the so many financial management schemes that emerged, one alternative stands out among the rest the credit card. When it comes to finances, technology through efficient banking system and services has given people better alternatives and options how to manage their finances. Credit card, especially to working people and those who live very busy lives, has become an ultimate financial savior . But, more than the glamour and the convenience credit card brings, there is much more to this card than most people could ever imagine. More than just being a status symbol or an add- on to expensive purses and wallets, credit card has revolutionized the way people spend their money.

Credit Card 101. In layman s terms, credit card is a card that allows a person to make purchases up to the limit set by the card issuer. Before indulging much into the never- ending list of the advantages and disadvantages of having a credit card, it is very important for people to first have a brief realization of what credit card really is in order for them to maximize its potentials. One must then pay off the balance in instalments with interest payments. And since it is a form of business, the longer the credit card holders wait to pay off his or her entire amount, the more interest pile up. Usually, credit card payment per month ranges from the minimum amount set by the bank to entire outstanding balance. Since having a credit card is a responsibility, only those people who are of legal age and have the capability to pay off the amount they are going to spend through their credit card, is allowed to have one.

S. use credit card because this is very convenient compared to carrying cash or checks every time they have to purchase something. Actually, most of the adults in the U. It is also equally important to be familiar with the different types of credit cards before you begin to build up credit card balances and to avoid having a nightmare of debt. All of these types come in one of two interest rate options the fixed and variable. Since credit cards are indispensable to most consumers, it is a must that they understand the types of card that include charge cards, retail cards, bankcards, gold cards and secured cards. Actually, it doesn t really matter if you decide to have a fixed- rate credit card because the interest rate remains the same.

Basically, credit card grantors issue three types of accounts with basic account agreements like the revolving agreement a. k. a. Compared to variable rate cards where rate may be subject to change depends upon the credit card issuer s discretion, fixed- rate carry higher interest rates. Typical Credit Card Account which allows the payer to pay in full monthly or prefer to have partial payments based on outstanding balance. Another category of credit card accounts includes the individual and joint accounts where the former asks the individual alone to repay the debt while the latter requires the partners responsible to pay. While the Charge Agreement requires the payer to pay the full balance monthly so they won t have to pay the interest charges, on the other, the Instalment Agreement hand, asks the payer to sign a contract to repay a fixed amount of credit in equal payments in definite period of time. The common types of credit cards available through banks and other financial institutions also include Standard Credit Cards like Balance Transfer Credit Cards and Low Interest Credit Cards.

Credit Cards for Bad Credit like Secured Credit Cards and Prepaid Debit Cards. Credit Cards with Rewards Programs like Airline Miles Credit Cards, Cash Back Credit Cards and Rewards Credit Cards. And Specialty Credit Cards like Business Credit Cards and Student Credit Cards. Some of the things you should consider is how will you spend with the credit card monthly, if you plan to carry a balance at the end of the month, how much are you willing to pay in annual fees, if you have a strong credit history and is does your credit in need of rehabilitation. Now that you have an idea how many types of credit card there is, it is now time to review your goals before applying for one. Once you have an idea of what you are looking for choose the right credit card for you by researching the information you need that will fit your basic needs. Shopping for a credit card?

You may also review the credit cards you ve research and compare them. Regardless of the type of credit card you choose, be sure to discuss your specific financial needs with your financial advisor or accountant before applying for any credit card. The most popular credit cards include Chase Manhattan Bank, Bank of America, Citibank, BankOne, Discover Card, American Express, First Premier Bank, HSBC Bank, Advanta, and MasterCard Credit Cards. It is a must that you understand 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 synonymous to invincibility, this may also trigger a person s thirst for material things and may lead into the temptation of buying something they don t really need. If they don t use it carefully, these may owe more than they can repay. A credit card bearer should always have in min that having a credit card is a big responsibility.

It can also damage their credit report, and create credit problems that are quite difficult to repair.

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