A credit card may seem like any other fiat currency you used in making purchases when you are at any store. However, a credit card is much more than that. You need to learn to have a positive relationship with your credit cards. Before applying for any credit card account, understanding the basics will help you have a better use of the credit cards and avoid the credit pit. You need to understand the types of credit cards available and the legalities attached to the usage.
- Types of Credit Card
Just like millions of people out there, you will assume credit card is just one. However, there are different types of credit cards to choose from. We can point out three types of credit cards, the commonest is the general purpose cards mostly issued by banks and other financial institutions. These general purpose cards are also referred to as unsecured cards. There are also private label cards that are usable at the store of the issuer. Lastly is the secured cards which are fully backed by your deposits which the creditor can fall back to in any event you fail to pay.
- Know your Card Interest Rate.
You should know it can range from 0 to 30% depending on your credit rating and history. There are some conditions that determine your credit card interest rate; credit score, payment history, asset, income, economic condition and credit inquiries. You will receive the best interest rate if you have a positive record and early payment of credit. Therefore, to have a good interest rate on credit, you must be in the good books of your creditors.
- No Limit to Number of Credit Card
Averagely, people do have close to 9 credit cards simultaneously. There is no rule that specifies the number of credit card you are entitled to hold at any given time. You can get a couple of multipurpose cards, and also retail store cards of a store you patronize often. Most of the retail cards offer incentives on usage which is why you need to have a couple for grocery and other essential needs.
- Compare Credit Cards Before Settling for One.
Credit card issues range from Banks, retailers, credit unions and credit card issues. You may think that seeing Visa or MasterCard are card issuers, they are not; they are just payment processors. Go online and research the credit card issuer with the best rates, payment plan and their legalities. The effect of this on your credit score will be positive as you won’t be making credit inquiries that can hurt your credit score.
- Be Aware of Annual or Maintenance Fees
This should be done when you are comparing credit card issuers. Being cognizance of the maintenance or the annual fees on the credit card will help position your credit in the right angle. It’s not as if the fees are too expensive, but being aware can help you plan ahead. Don’t be caught up when you are charged your last 100 bucks before pay day as an maintenance fee.
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