Know your Credit Card
The most basic definition of a credit card is “A card through which you can borrow Money as a loan for which the lender charges you Finance Charges / Interest.” This concept should be very clear in the minds of those who use credit cards. When using the credit card we are only delaying the necessary payment and it still has to be paid one day with interest. The more one delays, the higher the cost for that particular purchase. On the other hand a credit card is also a very convenient way of making purchases and if used sensibly it is really a friend in need.
Therefore, it becomes very important that we know the credit card very well and make the best use of it so that it always remains our good friend. Before deciding on a credit card, read the disclosures/ Terms and conditions written in the credit card application which will provide you with answers to all your questions.
However here are some of the key questions and suggested answers which should be looked into before deciding on a credit card. If you plan to pay your balance in full each month, then select a credit card which has the maximum “grace period.” A grace period is the time period available to pay your balance in full before interest charges are added. Check out the interest rate and method of charging interest. If the interests a very high, as most are, then it might be better to save up for buying that PS3, rather than paying for it with the credit card and paying it off later. Most Credit Cards have different interest charges for Purchases, Balance Transfers and Cash Advances. Find out the fee structure in respect to the Annual fee charged, late payment fee, and fee for exceeding the credit limit. Look into any other miscellaneous fee / charges for services like payment through Telephone, asking for duplicate copy of your statement of account and cheque returning unpaid.
Some credit cards offer rewards for using the card. Understand the scheme in detail. I am sure if you look into these areas, you will understand your card much better and chances are that you will have a happy and lasting relationship with your Credit Card.
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