www.creditcarddesk.com

Credit Cards and Finance

Before you even apply for a credit card there are some basics that you must know to prevent from eventually being buried in debt because of them. Unfortunately many individuals do not have much experience with credit cards and find out the negative side of these cards when it is too late.

Types of Credit Cards Available

There are various types of credit cards that are available. There are special ones for students that give a low initial interest rate and shorter expiry dates. These are easier to obtain and many times there is only an application form to sign. Other cards include the standard, premium, and the store credit card. The standard credit card has lower credit limits while allowing you to build your credit but you usually need some kind of a credit history already. The premium card requires you to have a higher income level, better credit rating but offers more benefits such as points programs, discounts and lower interest rates. Store credit cards are used for specific branches of stores and can only be used at their locations or their affiliates.

Interest Rates

The interest rates on these cards vary depending on the type that you have. There is what we know as a low interest rate card which can be as low as 6 percent or even better. The rates for other cards can span upwards to 30 percent. When the card has a higher rate of interest they are in most cases easier to obtain.

Subdivisions of Finance Interest Rates

It is not only the standard rate of interest that you have to watch out for. There are two main types of interest that you are charged. There is the finance interest rates on purchases that you make at a store and there is the other rate of interest for cash advances. Cash advances are given at a higher rate of interest and in a lot of cases charged to your bill every day instead of every month like the purchases are. This adds up to quite an extent if you are not careful. If you travel overseas, the interest rate for using them is even higher especially for ATM withdrawals.

Minimum Repayments

The minimum payments on these cards are based on the amount that you owe and not on the interest rate. When you look at the minimum payment and then at the amount of interest that is charged per month, you will find that the minimum payment does not usually cover the interest. This means that even though you pay the minimum monthly payment on time each and every month, even if you don’t make another charge on the card, your bill will steadily increase.

Smaller Finance Fees

Aside from interest rates, credit cards are also well known for the smaller fees that are included in with the fine print. Cash advances not only have a higher rate of interest but for independently owned ATM machines there may also be another two charges place on the card - one for the owner of the machine and the other to the financial institution. It is recommended that you always check your bills for such items. If the financial institute does not charge you with these items at first, they may start to. Look on your bill for any disclaimers concerning changing rates and fees at any time without giving notice.

Special Finance Programs

Credit card companies are always looking for new ways to make money. This includes creating insurance programs through the company amongst other things. They will have telemarketers call you to tell you about the program and ask to sign you up for thirty days for free. Although they do send you the paperwork, you are obligated to call them back to cancel it or you will be charged every month for this program. There are more than one that they will try to sign you up for as well and you could be involved in multiple different ones that cover the same things at the same time. You will be charged interest on these as well.

Credit Limits

After having your credit card for awhile and doing well with it, they may decide to increase your credit limit without consulting you. In this case you can call for a decrease. At the same time, if you want an increase earlier, you can call them and request an assessment.

Security Tips

Always check over your bills that you receive to see what exactly they are charging you for. You can eliminate some unnecessary and hidden charges in this way. Never give your credit card number on insecure lines or websites. If you have a PIN for the card, remember it and never have it kept with your card. Follow the security instructions that you will receive with it. When it expires or you decide not to use it again, cut the card up into little pieces and dispose of it.