| A Credit Cards Primer |
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| Written by Steven Young |
| Thursday, 30 April 2009 10:55 |
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Since its introduction a few short decades ago, the humble credit card has changed the face personal money management. Working people now use their credit card for everyday living which a slightly worrying fact. Perhaps originally thought of as a gimmick, the credit card has quickly become the most popular method of spending money everywhere.
Since its introduction a few short decades ago, the humble credit card has changed the face personal money management. Working people now use their credit card for everyday living which a slightly worrying fact. Perhaps originally thought of as a gimmick, the credit card has quickly become the most popular method of spending money everywhere. In layman's terms, a credit card allows a person to make purchases up to the limit set by the card issuer. Each month, the owner of the card can decide to pay an installment off the balance plus any interest or repay the owed amount in full. Normally this minimum payment is a percentage of the amount owed or a minimum amount set by the card issuers. Even though they will pay much more in the end, paying a regular monthly amount suits some individuals more so they are happy with the fact that they will pay more this way. 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. There is something strange about using a credit card because you don't actually see any money change hands which can lead to a false sense of how much has been spent. Interest calculated on a credit card is either variable or fixed. 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. When a Charge Agreement method is used then the card user agrees to pay the full balance each month without incurring interest charges whereas the Installment Agreement is based on a monthly repayment. People that prefer to keep their finances separate from their partners may decide to use an individual credit card rather than a joint account. Don't forget you must be strict about how much you intend to spend on your card each month or you may have a problem making the payments. Checking out what's available will be the best move you make as there is such a variety of card types, charges and agreements available and it is easy to just sign up for the first one that comes your way. List what it is you want your credit card to do and match those requirements with the card that meets 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. Many of the credit card companies are household names such as American Express, MasterCard, Advanta, Chase Manhattan and Citibank to name just a few. A credit card bearer should always have in mind that having a credit card is a big responsibility because if they don't use it carefully, they may owe more than they can repay. At all costs, avoid the situation where you then have to spend time repairing your credit report. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. If you're in the market for cards, why not compare low interest rate credit cards online at NowGodo? |