Having a credit card is one of the many decisions anyone can take in their lifetime. A credit card is useful, for so many things, apart from giving you access to money now. Some apartments and offices may require your credit card details before you can use them. Yet some people say it’s not good to have it as it makes you spend more of your money. So should you get a credit card or not.

Here are 25 things you need to know before you think of applying for a credit card, both the pros and the cons.

A credit card is not just a card that helps you to buy things. It can also help to get a good credit score, if you use it in a trustworthy manner.

You can get loan with a friendly interest rate if you have a good credit history. Plus you can also get cheaper insurance and a new cellular plan because of your credit history.

A credit card is similar to a debit card in appearance but it is different. While a debit card allows you to pay from the money in your account, a credit card allows you to pay without having money. It is like a soft loan that you’ll pay off later.

There are two types of credit card usually issued – unsecured and secured cards. Unsecured cards are not backed by a collateral or cash deposits, so you’ll get a limit based on your credit history and income level. A secured card is backed by a cash deposit which is usually equal to the card’s limit. So which should you go for. If you don’t have a good credit history yet, go for secured card. If you really need an unsecured card, then go with a cosigner. This is because the card issuer takes more risk when giving out an unsecured card.

With a secured card, you cash deposit acts as collateral and the risk of nonpayment is minimized for the card issuer. This way, you use your credit card while building up your credit history. While with unsecured card, you limit will be quite low. If you don’t have a means of income yet, then get a friend or relative to cosign for you.

There is a grace period associated with using a credit card. There are many advantages of having a credit card and one of them is the ability to pay back without any interest. But this can only happen if you pay back the money you owe during the grace period. The period usually lasts from twenty-one to twenty-five days.

You can get approved for a new apartment, get a mortgage loan, circumvent utility deposits at good interest rates with a great credit card.

The credit card interest is calculated by the average daily balance. This means that the money that remains from what you paid off during the grace period. That is if you pay half of what you owe during the grace period, you will now be charged interest on what is remaining during the month after the grace period.

You don’t pay any interest at all on your credit card, if you pay back during the grace period. If you miss the given time, then you pay interest on the balance.

Most credit card companies offer cash, coupons or travel reward when you use your credit card to buy things.

Credit cards let you choose how much money you borrow and how quickly or slowly you pay back the loan.

Credit cards payments requires a minimum payment, and it’s the least amount of money you can pay monthly without acquiring a late fee and tarnishing your payment history.

If you have a low balance, you’ll be required to pay a flat minimum rate. If you have a huge balance, your minimum rate will be high.

Credit utilization, payment history, length of credit history, new credit and types of accounts in use are the five factors that determine your credit score. A credit card can affect your credit score in a positive or negative way depending on how you use it.

The payment history is the most important factor affecting your credit card score. So always make sure that you pay all your credit debts on time.

The rewards that come from using a credit card for purchases comes from interchange fees, which is the fees paid by a company’s bank to a customers’ bank.

Not all credit cards have an EMV chip embedded in them, but y the end of this year, all the card issuers will be made to comply with issuing cards with EMV chips. This chips adds a layer of security to the cards.

Credit cards have a lot of fees associated with them, but many of them can be avoided.

The cash rewards offered by credit card issues are usually in the range of 1%- 2% of your total purchases.

Some credit cards may have reward option of 5%-6%. However these are limited to certain types of purchases and are capped at a particular monthly, quarterly or annual amount.

A credit card is different from a prepaid card. With a prepaid card, your credit runs out as you are shopping with it, but with a credit card, the money in your account doesn’t run out.
most prestigious credit cards, You_Should_Know_Before_You_Get_your_First_Credit_Card_22.jpg

Some credit cards have zero percent interest on purchases Others cards may have balance transfers of between 12 to 18 months. Check yours to see what you have.
You_Should_Know_Before_You_Get_your_First_Credit_Card_23.png, zero percent interest

Apart from cash benefits, a credit card can give you purchase protection, extended warranty, price protection, rental insurance for cars and other things that can save you money.

There are two ways of calculating the minimum payment of credit cards- the percentage method and the percentage plus interest plus fee method.

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When you apply for a new credit card, your credit score will dip low a bit. To avoid this, try not to apply for many cards at once.
many cards wallet

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