Credit Card 101
Basic Credit Card Terms
A credit card is a form of borrowing. Credit terms and conditions affect the overall cost of using the credit card, so it makes sense to compare credit card terms before you agree open a credit or charge card account. There are some important terms to know about when you’re dealing with a credit card.
The annual percentage rate, or APR, is a measure of the cost of using the credit, presented as a yearly rate. The APR directly affects how much it costs you to carry a balance on a credit card.
The grace period is a free period that lets you avoid finance charges if you pay your balance in full before the due date. A grace period is especially important if you plan to pay your account balance in full each month. If there is no grace period, the credit card company may charge a finance charge, based on the APR, from the date you use your card or from the date when a transaction is posted to your account.
Many credit cards still charge annual fees for using their credit cards. They can range from $25 all the way up to $100. Luckily, there are also many cards that have no annual fee.
A credit card may have other charges such as transaction fees. You may be charged a fee for a cash advance, a late payment, or exceeding your credit limit. Be aware that in addition to some of these fees, there may be other penalties. Some cards with low rates, for example, may change to a very high APR if you are late with your payment a certain number of times in any specified time period.
If you already know what type of credit card you are looking for, you can simply search on the many internet comparison sites or sort through the many offers you may receive in the mail. It will help to compare offers side by side in order to determine which card is the best one for you.
Credit Card Tips:
Be sure to shop around for the credit card plan that best fits your needs. If you can’t find the perfect card, find the one that is closest and try contacting the company to request the plan that you want. Many credit card companies are willing to negotiate in order to earn your business. If you are a student, try to apply for a college credit card since usually the companies are more willing to approve low limit credit cards for college students.
Read the entire cardholder agreement including all of the fine print to make certain that you understand all of the plan’s terms before you actually accept the card.
You can take steps to protect your cards and account numbers to prevent identity theft or unauthorized charges. Draw a line through any blank spaces on your charge slips so that the amount can’t be changed. Hold on to you credit card receipts at least until your bill arrives so that you can check to be certain that all of the charges are actually yours.
Keep a record in a safe place separate from your cards of all your account numbers, expiration dates, and phone numbers for each issuer in case you need to report a loss quickly.
Credit cards are one of the largest sources of debt in this country, but you can use credit cards wisely and to your benefit. The first step is to find the best card to fit your needs. The next step is to be aware of all of the card’s policies by reading the fine print in the cardholder agreement and asking questions of your credit card company. The most important part of being a careful credit card user is to keep track of your card and expenses and always pay on time.