A credit card is simply a payment card issued by a bank to consumers to enable the user to pay a retailer for products and services based on the accumulated debt. The availability of credit cards has opened up a whole new world of convenience and value for consumers. There are many ways to obtain a credit card such as the most common being through purchase at a business, an ATM machine, and also from a mailed form. The easiest way is to apply online through a secured gateway provided by the credit card company or issuer.
Credit cards offer benefits and advantages to the consumer who acquires one. They have become a way for people to make purchases online without having to leave their home. Credit cards offer the customer perks and benefits like bonuses, cash back, air miles, department store cards, travel miles, and so much more. These all add up to allow the person to make purchases with minimal effort and for those that have good payment history, they may qualify for low interest rates as well.
Some credit cards offer cash advances which allow the user to make purchases and take cash advances when they run out of money. They may also offer balance transfers which allow the consumer to transfer their balance from a high interest rate credit card to one with a lower interest rate. Balance transfers can save the consumer a lot of money because the consumer will pay less interest over the life time of the transferred balance. Another great benefit is the ability to make purchases online which is done through an internet terminal.
Credit cards have become a vital part of our daily lives. Without them, we would not be able to make even the simplest of purchases. It is important to have an understanding of the different types of APR. APR is an Annual Percentage Rate.
Interest charged is usually the most significant cost associated with credit cards. APR is calculated based on the outstanding balance, the amount of interest charged, the balance transfer fee and the statement balance. The higher the percentage APR (APR), the higher the interest charges. APR is the key factor when it comes to determining the cost of a purchase.
Many credit card companies calculate your APR based on your credit score. A credit score is based on several factors such as your current credit score, the length of time you have been paying accounts on time and whether there are any errors on your credit report. A higher credit score will lead to a lower APR. For example, a consumer with a superior credit score will get a lower interest rate than someone with a poor credit score.
Before you apply for any credit cards, always read the terms and conditions. There are often hidden fees and charges. Always read the fine print because once you agree to a debt it is legally binding. Credit card companies do not want you to learn the hard way that all credit cards have high interest rates and fees. If you find out too late that the deal you thought offered low rates is not in your best interest, then you can file for bankruptcy. Always read the fine print and check with the Credit Card Company or the issuer to determine your maximum credit limit.
Credit cards are useful in emergencies but you need to be careful not to accumulate debt and not to abuse your privileges. Always pay off your balance before the due date and make your monthly payments on time. In addition, if you use your credit cards for impulsive or spur of the moment purchases make sure that you can pay that purchase within the next month. Never let your emotions affect your financial decisions; make smart choices that will help you in the long run.