What You Need to Know About Credit Cards

Credit Card Basics

Credit cards are a modern staple given their convenience. They can come in handy when wanting to make instant payments without having to worry about exposing yourself to risk and fraud. They also provide you with a great way of boosting your credit score. In this post, we’ll cover some credit card basics you should know about or if you’re a first-time user or would like to adopt responsible credit card use.

Credit Card Annual Percentage Rate (APR)

The Annual Percentage rate (APR) gives you information on how much interest you’ll be charged annually. For instance, a credit card which charges an APR of 26.82% annually works out at 2.235% interest a month, which is typically higher than normal if compared to other credit cards issued by both banks and stores. However, you should be aware that the marketed APR tariffs are just guidelines and there’s room for negotiation should you need it. At the same time, if you have a poor credit score, you may get a higher APR or even be denied a credit card.

Credit Card Access and Approval

These days, banks take seriously the credit card approval process. Here is a list of individuals who may be denied a credit card:

  • Individuals with low credit scores
  • Someone who has a record of not paying off debts on time
  • Someone who regularly maxes out their credit cards

If you’d like to always be approved when you apply for credit card, make sure that you make your payments on time as well as use your cards responsibly. In most cases, poor credit card use may follow you for a period of 7 years, effectively locking you out of many benefits that come with owning a piece of plastic.

Transfer Fees – An Introduction

A balance transfer fee applies when you transfer the balance from one credit card on another card. Certain credit cards offer a 0% balance transfer fee; that being said, this is only for a given amount of time, which is considered as a grace period.  On the other hand, the money transfer fee refers to what you get charged should you want to move cash from your credit card to your bank account.

Credit Card Benefits

Let’s take a look at some of the reasons why you should consider paying using plastic instead of cash.

  • Using a credit card positively improves your credit score
  • A credit card may be priceless should you find yourself in an emergency
  • A credit card may allow you to earn rewards such as frequent flier miles and cash back rewards
  • A credit card is ideal if you tend to make a lot of online purchases
  • With a credit card, you qualify for payment protection should you have a problem with a transaction. Cards such as debit cards don’t have this feature.
  • With a credit card, you’re able to budget since you’re given a certain limit that you have to adhere to for a set period of time, mostly a month.

Ultimately, credit cards, if used well can transform the way you look at money as well as your financial discipline as you go through life.