Credit cards

Credit cards

Credit cards depending on which point of view you look at it can be a necessary evil or the best thing since sliced bread.

A credit card is rather like a standard loan carried on a piece of plastic, as with standard loans there is interest charged at a daily rate, the credit card simply has that interest applied when you use the card for balance transfers and for purchases.

Credit cards as well as providing the convenience of not carrying cash on your person also have a range of promotional offers to entice your custom, such as points for air miles, points off grocery shopping, and points off fuel.

It should be understood that the banks and building societies are the ones issuing credit cards, while the credit card providers such as VISA, Mastercard, American Express, Discover, Capital One make their money from retailers accepting the card, the banks on the other hand make their money from interest charges incurred when you use the card. Certain credit card providers are also their own issuers such as American Express, Discover and Capital One, meaning they make money from interest and late payment charges as well as from retailers accepting the card.

Also with the standard unsecured credit cards, there are also secured credit cards which are secured against your home or property, and since they are secured against your home or property the interest rate may be lower than normal, and as long as you keep up with the monthly payments your credit limit may increase annually.

Ideally an unsecured credit card where the borrower has a long history with the bank is the best type to apply for, as the interest rate can be pretty good, as well as promotional offers with 0% APR (Annual Percentage Rate) for a certain period (usually a year to fifteen months) and points for using the card which can be redeemed as cashback for money off grocery shopping or off gas usage, and even for air miles, but do bear in mind there would be no point applying for a card with air miles points if you have no interest in flying.

Credit cards can prove their worth if you can keep up with the payments, and are able to clear or move your balance to a newer card with an equally good promotional period, once the promotional rate on your current card expires. They can prove especially useful in an emergency, for example when trapped in a rural are without a csh machine for miles but a local store that accepts credit cards, you can always ask for cashback, although this is treated as a cash purchase which means the interest charges are higher than for standard purchases, when you are in an emergency this can be a life saver.

Visit Debt consolidation for some great consumer credit counseling services, and dealing with credit card debts in general.

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