A Credit Cards Primer

by Steven Young

Considering that the credit card is not that old, it has become a huge financial success. In our lets-have-it-now society, the credit card has become a primary method of having whatever we want and paying for it later. Once considered the ultimate symbol of status the credit card is now available to almost the whole adult population.

In layman’s terms, a credit card allows a person to make purchases up to the limit set by the card issuer. Each month, the owner of the card can decide to pay an installment off the balance plus any interest or repay the owed amount in full. Normally this minimum payment is a percentage of the amount owed or a minimum amount set by the card issuers. Even though they will pay much more in the end, paying a regular monthly amount suits some individuals more so they are happy with the fact that they will pay more this way.

Only persons over the legal age are permitted to hold a credit card as it is a huge financial responsibility. Most of the adults in the U.

Interest calculated on a credit card is either variable or fixed. Compared to variable rate cards where rate may be subject to change depends upon the credit card issuer’s discretion, fixed-rate carry higher interest rates. When a Charge Agreement method is used then the card user agrees to pay the full balance each month without incurring interest charges whereas the Installment Agreement is based on a monthly repayment. People that prefer to keep their finances separate from their partners may decide to use an individual credit card rather than a joint account.

Some of the things you should consider is how much will you spend on the credit card monthly, whether you plan to carry a balance at the end of the month and how much are you willing to pay in annual fees. Ideally, you should research the types of card available before you sign up for the first one that comes in the mail. Packages between the companies vary considerably so carrying out a review of the most popular is a sensible thing to do.

If you are still unsure then why not ask the opinion of your finances manager or accountant. The most popular credit cards include Chase Manhattan Bank, Citibank, Bank of America, BankOne, American Express, Discover Card, First Premier Bank, Advanta, HSBC Bank, and MasterCard Credit Cards.

A credit card bearer should always have in mind that having a credit card is a big responsibility because if they don’t use it carefully, they may owe more than they can repay. At all costs, avoid the situation where you then have to spend time repairing your credit report.

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May 2, 2009 | Filed Under Credit Cards

 

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