The Basics Of A Credit Card
Most people know how to spend money using a credit card, but most do not know the very basics of a credit card and how it actually works. Contrary to popular belief, it is not an endless amount of money. In fact, using a credit card can actually cost well more than what you actually spend.
What Is Credit?
Simply put, a credit card, or credit is an agreement or contract between you and a financial group stating that they will give you a certain amount of money that you need to pay back in the future. The group, such as a bank, lends you the money and expects a full return plus additional fees called the interest rate if you don’t pay it back in full every single month. Credit cards are extremely handy in emergencies such as if your car breaks down and you don’t have the cash to pay for the repair. They are also used for:
A credit card allows people to buy now what they might not have the cash for. It is also perfect for online shopping where you can’t pay cash.
Buying with a credit card can allow you to pay a smaller amount over a few months for a larger item that you may not be able to afford the entire price of.
If you only carry cash you run the risk of losing it or having it stolen. Credit cards can be canceled if lost or stolen whereas cash is just gone.
If you are traveling, especially long distances where your bank isn’t located, a credit card is much easier to use. You won’t have to worry about using cash, and most hotels, and car rental agencies require a credit card to even make a reservation.
Getting the Best Credit Card for You
There are various fees and charges among credit card offers that make certain ones better than the other. You need to shop around and look specifically for these important features:
Annual Percentage Rate –
This is the interest rate that tells you have much extra you will have to pay on top of what you actually charge to the card. The better your credit rating the better your APR will be
Grace Period –
This is the time that creditors offer you the ability to repay the credit card in full without being charged a finance charge. If a credit card company does not offer a grace period then that means that you will pay the finance charge from the day you charge something to your card.
Annual Fees –
There are some cards that charge you a fee each year to have the credit card. They usually range from $15.00 to $75.00, but others do not charge a fee at all.
Cash Advances –
Some credit cards will allow you to take cash off the card instead of charging it. Flat fees can be charged for using this convenience with some credit card companies whereas others charge you monthly for this.
Use your credit card responsibly because it affects your credit rating. Your credit rating is what decides how much credit is offered to you and at what rate. The better your rating is the more likely you will be extended credit.
Credit card generates unnecessary expenses for the user, therefore it is advisable to keep changing the cash verification value (cvv) at regular intervals cvv shop online for it and keep it safe from external harm or getting stolen as the bank account and savings will be in jeopardy.