Things You Must Know About Credit Cards

With thousands of different cards to choose from on the market today, it can be hard to know which one is right for you. To make matters even more confusing, laws and regulations regarding credit cards change all the time, making it hard to know if your company is offering you a fair deal. Fortunately, there are a few basic things about credit cards that are almost universally true.

 There Is A Credit Card For Everyone

There are hundreds of credit cards available today. Among all the choices, however, there are some general categories. For example, general purpose cards are issued by major banks and can be used just about anywhere, while retail or store credit cards can only be used at the retail establishment that issued the card. Credit cards also can be sorted into secured and unsecured. Secured cards require you to leave an initial deposit with the bank that can be used to pay the card if you default. Secured cards are easy to qualify for, but they tend to come with fees and few rewards. Unsecured cards do not require any deposit, but they are harder to get. Nonetheless, unsecured cards are much more common.

 There Are No “Perfect” Numbers

Despite what your friends may tell you, there is no “right” number of cards to have, or “perfect” amount of credit to have extended to you. The major credit bureaus do not look at the number of lines of credit you have open, and they are much more interested in how much of your available credit you have used than how much credit you have available. That means that taking out another card does not hurt your score. You should be aware, however, that if the issuing decides to pull your credit report, it can affect your score slightly for a few days. Also, if you have a habit of maxing out your credit cards, be prepared to see a lower credit score than you would otherwise have.

 Interest Rates Are Mostly Determined By Your Credit History

While no bank will ever reveal the exact formula they use for computing the interest rate on the card they offer to you, there is a strong correlation between your credit history and the interest rate. People with high credit scores who have a long credit history tend to qualify for the best rates. Individuals with low scores and a lot of missed payments and charged off accounts will end up with “bad credit” credit cards with the highest rates.

It is critical to realize that a bank can change this interest rate at any time if your rate is not locked in. That means that if your score goes down for any reason, the bank issuing your credit card can raise your rate. Note that this increase in rates will only apply to new purchases, it cannot increase the rate on debt you have already accumulated.

 You Need To Look For Good Deals

Even if you think you have a good deal on the credit card you have now; odds are there’s an even better one somewhere out there. Furthermore, if you are working on improving your credit score, you may want to shop around for a new card every six months. As your score goes up, your credit card offers will improve. As you look around, don’t be afraid to ask your current bank to improve the rate or payment terms on your current card. Many banks will give you a better deal if it means keeping you as a customer.

 Read The Fine Print

Also, take the time to learn what these common terms mean.

Credit line/ credit limit. The total amount of money that you may charge to the card remember that this sum includes interest and fees.

APR. This stands for annual percentage rate, otherwise known as the interest rate. This is only charged on balances that are not paid off at the end of each month.

Interest calculation method. Not all banks compute interest in the same way. Some will simply charge the APR divided by twelve each month while others have much more complicated formulas. Read this section of the card agreement carefully.

Fixed and variable. A card with a fixed rate APR has an interest rate that will never change. A card with a variable APR, however, can fluctuate from month to month. Fixed-rate cards are to your advantage if the rate is low, variable rate cards are good if you think your rate will go down in the future.

Grace period. This is the amount of time that you have to pay your balance in full before interest is charged.

 You Can Choose How Much You Want To Pay

Paying the balance in full each month is good if you want to avoid interest, but there is no real advantage to you or your credit score by carrying or paying off your balance each month. Make a payment based on what is right for your budget, not on what you believe is good for your credit score.

 Platinum, Gold, And Black Are Just Marketing Terms

Many people make the mistake of assuming that a platinum card is better than a gold card. The truth is that there is no difference in a lot of these cards, and there is no official definition for any of these terms. Just ignore these words, and look at what each card has to offer.

 Learn About Your Rights

Several laws have spelled out the rights of credit card customers. For example, the Truth in Lending Act requires banks to explain all of the terms of the contract. The Fair Credit Billing Act was passed to give you the ability to dispute and correct errors with your bill and your credit report.

Figuring out which credit card is right for can be tricky, but Credit Help Cards can help you find a card that meets all of your needs. If you understand how credit cards work, then you’ll have a much better chance of not only finding a good card but also of using it to your advantage.