If you are interested in getting a credit card or just got your first one, you will need to educate yourself as much as possible. The more you learn about credit cards, the more likely they will be to work for you instead of against you. The best way to get the most out of your piece of plastic is to learn everything you can about how it works and how you should use it.
What Credit Cards are for
There are certain things that credit cards are intended for and things they are not. Credit cards can be a very convenient way to pay for things. If you want to purchase something particularly expensive, it’s a lot easier to just use a card rather than pay with a ton of cash. A credit card can also be a good way to improve your credit score, provided that you make all of your monthly payments on time.
You will find that credit cards are also a very secure payment method, and you have lots of protection against unauthorized charges. If you get scammed by a seller, chances are you will be able to get your money back without any issues. Credit cards have effective fraud departments that you can use to your advantage if you ever need to.
What Credit Cards are not for
You should not look at your credit card as free money, because you will eventually have to pay for everything you use it to buy. It’s also important that you know the difference between a credit card and a debit card. When you swipe a debit card, the money is instantly taken out of your bank account. When you swipe a credit card, it’s essentially like you are taking out an advance. You will eventually need to pay the money that you spend with your credit card back at the end of the month.
Types of Credit Cards
There are numerous types of credit cards, and it’s important that you take the time to find out what some of them are. You will need to make a point of choosing the credit card that best matches your specific needs.
Some standard credit cards are low-interest, which simply means that they come with a low interest rate at the beginning, but the rate will increase after a certain period of time. There is a balance transfer, which means that you move your existing credit card debt to another card. You should only do this if you can get a lower interest rate though.
Rewards credit cards will give you points each time you use them. Once you have enough points, you can use them for an airline ticket or something else; these are “travel credit cards.” There are cash back cards, which means that you get a certain percentage of what you spend with the card back after a while. For example, if you spend £10,000, you might get £100 back.
How they work
When you swipe a credit card when you pay for something, you will need to repay your bank later for the purchases you have made. You will need to know how long your bank’s billing cycle is. After each cycle, your bank will collect the transactions you have made and send you a bill for them by mail or electronically. It is important to keep in mind that billing cycles don’t always line up with each month. The billing cycle could start on the 1st of the month or any other date. Make sure that you ask your credit card provider so you know when your billing cycle begins. This will be key information to have when it comes to making sure you pay off your balance on time.
How Credit Cards Affect Credit Scores
Your credit score will definitely play an important role in getting a credit card. You might have a hard time getting certain cards depending on what your credit score is. It’s also important to remember that you can actually improve your credit score by paying off your balance on time consistently. If you are always making credit card payments late, your credit score can be affected in a negative way.
APR
You have probably heard the term “APR” before, and it is basically the interest rate that you are charged for your credit card. You may get an APR of 0% for your card for the first 12 months, but after that it will go up. The interest rate on your credit card will largely depend on what your credit score/history is like. If you have had your card for a while and you have a good history, you can try negotiating with your provider for a lower interest rate.