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Why Get One, What to Know, How to Choose, and Your First Card Tips

What You Need To Know About Credit Cards

What is a credit card?

A credit card is a card that allows you to borrow money to pay for things. There will be a limit to how much you can spend called your credit limit. At the end of each month you can either pay off the whole of the amount you owe or make a minimum repayment.

Do you need a credit card?

Using a credit card is a useful way of making purchases:

a) A credit card means you don't need to carry huge amounts of cash around and risk losing it.

b) A credit card means you can buy items over the internet.

c) A credit card means you can make purchases abroad without having to worry about local currency.

d) A credit card gives the opportunity to spread the cost of a large payment over several months.

e) A credit card is useful in an emergency. For example, an unexpected repair to your house or car.

How do you choose a credit card?

The main two US credit card issuers are Visa and Mastercard. These are accepted in most places and in 150+ countries worldwide. Beware of less well known brands that may not be accepted everywhere.

Before you choose which credit card is the best for you, remember to read the terms and conditions carefully. Never sign up for a credit card without fully understanding what you are agreeing to.

Remember that all the plus factors will be prominently displayed in large print.

You may have to study the small print carefully to discover if there are any negative factors.

What You Need To Consider:

This is the rate of interest that you will pay on any outstanding balance.

You may be offered a low or 0% rate of interest for a limited time (Up to 6 months) when you sign up for a new card. A higher rate of interest may be charged for cash withdrawals.

Card issuers may offer you a lower rate of interest if your swap your balance from another credit card to theirs.

Remember to check when interest payments will begin. Will you pay interest from the day of the purchase? Or will you have a number of days interest free before you begin to pay? There is usually no interest free period for cash withdrawals.

Some cards over points or rewards for every pound spent on the credit card. Make sure that these are appropriate for you. For example, there&'s no use collecting airmiles if you never fly.

Remember to check what the minimum monthly repayment will be. If you borrow $1000 on your credit card the monthly minimum repayment will probably be in the region of $25. But if you only pay this amount each month it will take a long time to pay off the balance and cost a lot in total when you include the interest payments.

This is the fee that the issuer will charge you every year for using their credit card. Not all credit cards have an annual fee, so remember to consider this when you are choosing which one is right for you.

There will be an extra charge, as well as the interest owed, if your payment is late. This charge may even be more than the amount you owe so be very careful to check what the charge is, and to ensure that all your payments are made on time. A good way of doing this is to set up a direct debit from your current account.

You may also be charged a fee if you exceed your credit limit.

Will Your Application Be Accepted?

Whether or not your application is successful will depend on your credit rating. Your credit rating depends on your credit history (a record of your use of credit) and is based on the record of your ability to repay debt.

You can obtain a copy of your credit file by contacting a credit reference agency. There may be a small fee for this service.

When you application has been accepted you will be given a credit limit. The credit limit will be fixed when you first apply for your card (although you can ask for it to be increased or decreased later) and the limit, including the amount you have left available to spend, will be shown on your monthly statement.

Why Apply For Credit Cards?

There are a few reasons why someone should apply for a credit card. Applying for a credit card is the beginning of your credit score. If you have never had a credit card before then chances are you don’t have any credit either which makes getting loans for houses and vehicles incredibly hard. The best thing to do is to get a credit card and to treat it responsibly. Buy things with it but then pay it off as soon as you can that way your credit score will keep raising. After about six months of religiously buying items such as gas or clothes on the card and immediately paying it off your credit score will rise. You may even see your credit limit on your current card raise. This helps people build credit scores which is absolutely necessary if you want to buy a house or a nice vehicle.

Credit cards are often listed as very evil things. This is because people treat the cards irresponsibly and think they can just pay it off whenever. In no time they have more debt then they could have imagined and the interest rates are killing them. As I said, as long as you are responsible with the credit card then you will be just fine. You wont have to worry about people calling you to get payment on interests and debts that you have accrued because you will be paying them off every month!

Tips For Getting Your First Credit Card

Most of us get a credit card on our name when we go to college or when we are in our senior years of high school and all of us stumble into the same types of difficulties when it comes to finding an issuer and managing the credit card. Most banks ask for a prior type of credit history that most of the time lacks and for some type of warranty that we will be good payers. It is true, finding the right issuer and building a credit card history is not easy, but it can be done.

When you apply for a credit card the bank will usually ask you questions regarding your previous credit lines. Most young people do not have any type of credit history and this makes the banks unable to positively respond to their application.

There are two things that you can do to go around this problem. One is looking for an issuer with a special offer, as there are many banks that offer credit cards for people who are just starting their first credit line. It is true that you will not have an extended credit line at first, but if you prove to be a good-payer and a loyal customer to the bank, you are likely to receive more credit line in time.

If, however you cannot find an issuer that will give you a first chance with credit lines, you will need to build a credit history yourself. You can do this by getting credit cards from gas stations or from stores. Once you become the owner of such a card, make sure to balance it wisely and after a couple of months you can re-apply for a bank-issued credit card.

Actually, the most useful tips for those who get their first credit cards now are not those about how to actually obtain the card but about how to use it. Some happy card holders hit the shops as soon as they have the little plastic card and spend much more than they can pay back. The banks will never like that and there are no exceptions or grace periods only because you are new.

All late payments count as bad credit and if you make such reckless spending, you are in danger of having your credit ceased as soon as it was approved. You will also be considered a "bad" client if you lose your credit card or if you forget credit card information often. Avoid carelessness when you deal with money and note down all the information regarding your card and the transactions you have made with it.

Another good advice that all new card holders should follow is about owning only one credit card in the beginning. This is a good idea because it helps you get familiarized with the banking world, the card system and it is also a test to see if you can balance money. After one year or so, of good credit history you may apply for a second credit card; however, if you've had payment problems it is wise to stick to that one single card until you can correctly manage card-money.

It is always difficult for new-comers to break through in the baking world, yet with patience and a bit of wits you can become the owner of a new credit card. The difficult and tricky part begins when you start balancing it. Keeping records of card information, of the transactions made with it, remembering never to overspend or delay payments and generally having a careful and wise banking-attitude will make you a good client and a satisfied customer at the same time.