A credit card is simply a payment card issued by a bank to consumers to enable the consumer to pay a retailer for goods and services on an agreed basis in exchange for a pre-decided charge from the card holder to the retailer. They can be used everywhere like ATMs, petrol stations, supermarkets and so forth. As such there are millions of credit cards being issued today all around the world. In the USA alone there has been a record rise of almost ten per cent in new applications over the Christmas period alone.
Credit cards give the impression of being very easy to use and yet the fact is that they have many complexities and rules that need to be understood before being used. Often people do not fully understand how their bank account is structured, how credit cards give the consumer control over their own money, or how they can arrange for their bank to transfer funds from their bank account to their card. For example, it is possible to set up a credit card with a major bank such as HSBC or Citibank and they will work with many of the same rules and regulations regarding withdrawing cash from their bank account and loading funds onto their debit card. However, they may differ slightly when it comes to loading funds into their debit card.
Certain other factors need to be considered when choosing credit cards. One such important factor is the APR (Annual Percentage Rate). The APR is the key cost of using credit cards and is expressed as a percentage rate over a certain amount of time, usually over one year. This figure tells us what the monthly charge will be for an account and its available balance. It can be a very good indicator of the cost of using a credit card, in that there are some cards which charge a higher interest rate than others when it comes to cash withdrawals from the account and loading money onto it, but then charges a lower interest rate when it comes to debiting the account.
The next thing to consider when choosing credit cards is whether to go for a major credit card company such as MasterCard, Visa, American Express or Discovery. Major companies often have strong partnerships with certain retailers, so they might be able to provide cash advances at a lower rate or offer bigger discounts on certain purchases if we use their cards. This can prove to be a great benefit if you frequently shop online, or have other means of making purchases such as debit cards. You should also compare the APR between these different companies, to see which can offer you the best deal.
Some credit card companies have taken on certain practices which may not be in keeping with the spirit of consumer protections and so some of these practices may be illegal. For example, some allow customers who make weekly purchases load more cash onto their cards than they would like to. Some allow consumers to only pay interest charges on the full amount they owe, rather than on a percentage of the entire amount. A few credit card companies use a system whereby consumers cannot exceed the maximum credit limit on their cards. Credit limits are intended to be helpful, but if someone exceeds their limits they can run into trouble with law enforcement agencies.
Some people prefer to use debit cards when paying for things as they don’t like to have cash on them and can thus eliminate the risk associated with carrying large amounts of cash. This is good if you only want to spend what you can afford to pay in cash, but it isn’t ideal for those who regularly use cash at stores or for those who regularly make payments on credit cards. One way of avoiding the risks associated with carrying large sums of cash is to only pay bills using debit cards. Another way of avoiding such risks is to only pay interest on the full amount of money you owe, as opposed to paying interest on a percentage of the money you owe. This will ensure that you will not run into financial trouble when interest charges begin to build up on your bill.
