It’s amazing how cashless payments have made credit cards a must have for the shoppers of today. Did you know that in the United States, the total credit card debts have already reached more than $900 billion in the year 2007. This only means that Americans really find the need to apply for credit cards. What makes credit cards such a hot item? Credit cards offer more than just the convenience of payments if you are short on cash, but you also get useful rewards such as points for gas and other items.
So you finally decided to apply for a credit card, but what are the things that you need to remember? Note than in everything you apply for, there are terms and conditions regarding making transactions with the said company. For one thing, it will be smart for you to be familiar with the guidelines and the other conditions involved when you become a cardholder of their company.
Here are some important terms you need to know before you close in on a deal and get yourself a credit card. Note that these conditions can vary from company to company. These were taken from the United States Federal Reserve Bank website.
APR – This stands for annual percentage rate. Simply put, the APR is the interest you pay when you have an outstanding balance on your card, or if you make cash advances, or when you make balance transfers. It is a yearly rate that you pay, but it may be divided over 12 months. There are two types of APR’s, which have fixed rates or variable rates. The rates depend on current Treasury bill rates.
Grace period – It will be preferable if you apply for your card and your card company gives you a grace period. This is the amount of time that you are given until you can pay off your monthly minimum dues. Sometimes, card companies will charge fees if you fail to pay within the grace period. There are instances when cards allow you to pay within 25 days of statement date.
Fees – Cardholders may also be charged fees depending on what kind of transactions they make. For example, there may be a fee for making cash advances, or for making balance transfers. If you also go above your credit limit, expect to have fees to pay. Also, fees for late payments may be imposed. It pays for you to be aware of these conditions.
Perks and Rewards – For every credit card transaction you make, you can also earn points to help you gain rewards. These points may come in the form of gas discounts or discounts from department stores, groceries, and the like.
Have these terms and conditions in mind, and you will surely be able to choose for the perfect card to suit your needs. Always keep an eye open for hidden charges and additional fees. There are tons of resources online that help you check out all the features of the top credit card offers in the market.
This article is courtesy of CreditCardOffersWeb.com, where you can Compare Credit Cards and hundreds of Credit Card Offers and securely Apply for a Credit Card Online.
If you use credit card responsibly, is it better for your credit to have one or two?
I'm a college student and I'm trying to build my credit. I currently have Visa student credit card at about 12% annual interest, no annual payments, and a limit of $1000. I have been using this credit card responsibly for a year (it seems so easy with online payments!) Does it matter how high my credit limit is on my credit card for building my credit? Should I get a Mastercard or American Express to help build my credit? Or stick to one?
Answer
Great question!
It's good that you are concerned about your financial well being at such a young age. Keep in mind however, a high credit score is NOT a wealth indicator. There is a great book called "The Millionaire Next Door" that talks about normal, everyday people who saved and invested for 20-30 years and became millionaires. Every one of these "everyday Joe's" avoided buying new cars with big car payments and using credit cards.
You sound like a very intelligent person with a good head on your shoulders. While you are young, start saving as much money as you can. The only person you are helping by using credit cards is the bank! Notice how many Americans can't live without the prospect of borrowing money for everything? This is why we are in a recession. People want to build their credit score and borrow, borrow, borrow. Living beyond their means has finally caught up with them.
Check out these links. They provide some great advice for a young person like you. Merry Christmas!
Building credit scores:
http://www.cbsnews.com/stories/2005/10/18/earlyshow/living/money/main951008.shtml
Buying cars:
http://www.daveramsey.com/etc/lms/drive_free/
The power of investing at a young age:
http://www.daveramsey.com/etc/cms/index.cfm?intContentId=64
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