The best understanding you should have about credit card
You have been using a credit card for a while now or you’re about to start using a credit card. Whichever group you belong, as a cardholder or an intending cardholder, there’re important things you need to know about the credit card.
For you to understand credit card and how it works, the pros and cons, about credit card, you’ll have to carefully read this article to the end so that you’ll understand more about credit card. This information will help you in choosing the best credit card, either as a student credit card or business credit card.
What is a Credit Card?
Credit card is that important means you can use to borrow money from a credit card issuer such as the financial institution or companies. And it’s mostly accompanied by interest in most cases fees. However, borrowing money with your credit card has some limits, Advantages and if you’re not careful you’ll have huge disadvantages.
So, before you go ahead to fill that credit card application, consider the advantages and the disadvantages of using a credit card. Most importantly, you should know more about credit card you’re about to apply for.
Advantages of a credit card
- It is best for emergencies
- You can use it to buy now and pay later
- For purchase protection
- If you use it wisely, it’ll help build your credit value (good credit)
The Disadvantages of a credit card
- There’s high-interest rate on the card and annual fee charges.
- It increases your debt
- It can make you have poor credit if you don’t use it wisely
Tips about credit that’ll keep you in control of your Credit card
- Ensure you use one credit card. This is more important if you have 2 credit cards, don’t get 2 cards from the same card issuer or company in case you wish to do a balance transfer on any one of them.
- Use the credit card that’s secured. Use the type that requires cash collateral for a deposit. This collateral can become the credit line for your account.
- Go for the best credit card. Choose the best credit card for the purpose you want to use the credit card for.
- Do not borrow with the card an amount you can’t pay
- Ensure to pay your monthly bill on time and in full as well.
You can take the bold step of paying your bill in full to avoid building up a large amount of debt. Of course, this will create bad credit scores for you.
If you any reason you have a challenge with paying your debt, you can reach your credit card issuer so they can work out a payment plan for you.
Before getting your Credit card
Before you get your card, you’ve to know all you need to know about the credit and the different type of fees they charge. Below are some of the things you need to know:
Credit cards come with different fees and the most common ones are late fees, late fees are charged for not minimum payments are not paid on time. There’s also and over-limit fees charge when you exceed your credit limit.
The Interest rate
Credit card companies charge cardholders for using their card. It can range from 6% to 36% depending on the card issuer and the person’s credit history. But if you pay off your complete credit balance, you won’t have any interest charges for that particular month.
this is a single sum of the amount you pay to the credit company for borrowing money from the company.APR is calculated annually and it doesn’t change for the first 12 months.
The grace period is the free period you’ve that you won’t be charged any interest on your purchases. It’s from 20 to one month. To qualify for the grace period, you must have paid your new balance in full during the particular billing period. Another is that you’ve to pay your balance in full before the payment due dat.
You can’t get the grace period if you only paid the minimum payment. If you only paid the minimum payment, you’ll be charged interest on your future purchases right from the day you make your purchases.