Credit card anyone?
The emergence of the electronic age has made almost everything possible. Determining and curing terminal diseases, reaching uncharted territories became a possibility, and most of all; the everyday life of people has been made easy through technology. We now have more convenient stores, easier means of transportation and a variety of gadgets that makes work and pleasure almost effortless.
When it comes to finances, technology through efficient banking system and services has given people better alternatives and options to manage their finances. Among the many financial management schemes that have emerged, one stands out among the rest the credit card.
Credit cards have become an ultimate financial savior especially to working people and those who live very busy lives, More than just being a status symbol or an add-on to purses and wallets, credit cards have revolutionized the way people spend their money.
But there is much more to this card than most people could ever imagine.
Credit Card 101
Before indulging into the never-ending list of the advantages and disadvantages it is important to have a brief description of what a credit card really is.
A credit card is a card that allows a person to make purchases up to a limit set by the issuer. One can then pay off the balance in installments, with interest.
Usually, the payment per month is the minimum amount set by the issuer. And since it is a form of business, the longer the card holder waits to pay off his or her entire amount, the more interest piles up.
Most adults in the U.S. use credit cards because it is very convenient compared to carrying cash or checks every time they have to purchase something.
It is also important to be familiar with the different types of credit cards to avoid having a nightmare of debt. Since credit cards are indispensable to most consumers, it is a must that they understand the types of cards available: charge cards, bank cards, retail cards, gold cards and secured cards.
And all of these types come in one of two interest rate optionsthe fixed and variable. If you decide to have a fixed-rate credit card the interest rate remains the same throughout the account life. Fixed-rate accounts carry higher interest rates.
In a variable rate the rate may be subject to change depending upon the prime interest rate, your credit rating, or simply the credit card issuers discretion.
Basically there are three types of accounts with basic agreements like;
The revolving agreement a.k.a. Typical Credit Card Account which allows the payer to pay in full monthly or prefer to have partial payments based on outstanding balance.
The Charge Agreement requires the payer to pay the full balance monthly so they won't have to pay the interest charges.
The Installment Agreement asks the payer to sign a contract to repay a fixed amount in equal payments in definite period of time.
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.
Common types of credit cards also include Standard Credit Cards like Balance Transfer Credit Cards and Low Interest Credit Cards;
Credit Cards with Rewards Programs like Airline Miles Credit Cards, Cash Back Credit Cards and Rewards Credit Cards;
Credit Cards for Bad Credit like Secured Credit Cards and Prepaid Debit Cards; and Specialty Credit Cards like Business Credit Cards and Student Credit Cards.
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Now that you have an idea how many types of credit card there are, it is time to review your goals before applying for one. Some of the things you should consider are;
How will you spend with the credit card monthly?
Are you planning to carry a balance at the end of the month?
How much are you willing to pay in annual fees?
Do you have a strong credit history or does your credit need rehabilitation?
Once you have an idea of what you are looking for choose the right credit card for you by researching the information you need, reviewing the credit cards you've researched, and then comparing them.
Shopping for a credit card?
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.
You need to 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, they may lead into the temptation of buying something you don't really need. Always have in mind that having a credit card is a big responsibility. If you don't use it carefully, you may owe more than you can repay. This will damage your credit report, and create problems that are difficult to repair.
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Posted in Business Service Post Date 09/26/2015