The introduction of cards has revolutionized the banking industry and how financial activities are carried out. As a result, the processes required to carry out all kinds of financial activities are a lot easier than they used to be.
However, you need to understand the card options available. Adequate knowledge about this will help you get the right one. Also, it will help you use it properly. For instance, proper use of a credit card will help you achieve and/or maintain a good credit score.
This is why this article will address subjects that center on credit cards. We will even make comparisons with debit cards at some point in this article. Everyone is advised to keep reading considering the relevance of this article to all.
It allows you to take loans from a service provider to carry out various financial activities. The reason for the loan may be to make cash advances, balance advances, or purchases. But as with any kind of loan, there is a structure in place to have you pay back at a set time. The structure is such that paying up on time will benefit you more.
The reason is that small or late payments will make you pay a lot more than you borrowed. For instance, you can end up paying 300 dollars over 9 months for a loan of 240 dollars. That is an extra 60 dollars. Let us see how this happens.
After certain agreements have been reached and the credit card has been issued, the holder will have a monthly statement sent. The statement will explain transactions that the card has been used for.
Furthermore, the total amount owed by the holder, the minimum payment expected (mostly monthly), and the payment’s due date, are some vital details that will be on the statement. Paying up the entire amount owed early enough is the best option. It could even mean that the cardholder will not pay any interest on the loan obtained. However, people who are unable to do this are at least advised to meet up with the minimum payment. Although they will have interest over the amount owed, they will maintain a good credit score.
This reason is that doing so will prove the cardholder can get loans and meet the lender’s requirement. For more on this subject, you can watch this.
Service Providers that Issue Credit Cards
Credit and debit cards are the 2 main cards used by holders as issued by banking service providers. However, some other service providers outside of the banking industry offer it to their customers.
Some stores offer it to their customers. Walmart, Chevron, Macy’s are just a few examples of such service providers. Also, some entertainment and travel companies offer it to qualified customers. The American Express card is a good example of such cards.
Similarities Between Credit and Debit Card
As the two main options, there are differences as well as similarities between them. Let us go over some of the similarities:
They look the same way. You might not even be able to tell the difference without experience or attention to detail. About similarities in looks, they have expiration dates, EMV chips, card numbers with 16 digits, and magnetic strips.
Many of them are produced by manufacturers that also produce debit cards. We are not just talking about issuers. For instance, companies like VISA, MasterCard, and many others have both.
This is one of the highlights of using any of these options to carry out financial transactions. Both are easy to use.
Advantages of Using Credit Cards
Several benefits come with using a credit card. Some of them include the following:
People who rely solely on debit cards can only use what they have put in the account linked to it. This is even though there may be overdraft provisions by the issuer. However, it would not be as much as what is obtainable with credit cards.
You can get access to funds because of what credit cards offer. So, you can purchase very important things on time even if you do not have the cash. The reason is that you are entitled to a degree of credit with it.
Protection Against Fraudulent Activities
The authorities are very particular about protecting the holders of such cards. Although there are laws that protect holders of debit cards as well, it is not as much as what is obtainable with this one.
As long as (suspected) fraudulent activities are reported promptly, the holder is protected. This could be as a result of loss or theft of the item.
If reported within the time frame required, the holder will not even be held accountable for fraudulent transactions.
Helps Build Credit History
There are many financial institutions and money lenders that will not offer loans without a credit score. Furthermore, the score has to be good. For instance, you cannot even get a first mortgage without it.
This is because the money lending service needs to know you are capable enough to get and repay your loan. This can only happen when you have a credit score they can access. Well, you cannot build one without this card.
Your history of using it will determine your score as evaluated by 3 major regulatory bodies in the country. So, this is one of the reasons you should be interested in getting it. However, you need to use it the right way to have a good score.
Zero Interest Accrued if Used Well
One of the misconceptions about this card is that it is expensive to own. The reason many of the people that believe this give is the interest accrued on loans. Well, this only happens if you do not use it well.
Paying up your debt before the due date even means you will not pay any more than you borrowed. So, you are advised to live within your means by borrowing only what you can pay back on time.
Finding the Right Credit Card
You need to know how to identify and get the right one to enjoy it. To make sure of this, here are some things you should look out for:
Cash Withdrawal Charge
Some issuers demand charges for every cash withdrawal. These charges can accumulate and become a big deal if care is not taken. So, you should either avoid issuers that do this or make sure the charges are very small.
We strongly suggest you deal with an issuer that demands low interest when payment is due. This is so that you will have a lesser burden if you are unable to clear all the debt before the due date. A low or considerate interest rate will be helpful especially for such a time.
Interest-Free and Grace Period
You are advised to go for an issuer with a lengthy interest-free period. Also, deal with an issuer that still gives some grace period in case the money is not paid back at the due time.
Other than what has been explained above, a few other things should be considered when trying to get a credit card. You can see https://www.kredittkortinfo.no/ for more on this subject.
We have discussed some things you should know about credit cards here. We hope that you have learned a thing or two and that you make informed decisions going forward.