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Getting a Credit Card
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Each card holder can spend money up to the limit set on the card. 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. Usually, credit card payments per month range from the minimum amount set by the bank to entire outstanding balance. Obviously if you choose to pay small or only minimum amounts each month then the d |
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Probably the most significant financial move forward in recent history is the use of the credit card. For many people it is the only way they can even consider living from month to month. Considering the alternative, would the Western world be such a huge consumer based economy if the credit card was still now only available to those who least needed it? It is a simple concept really; each person has an ongoing loan with money available up to a preset amount which enables the card holder to purchase goods within that limit. The card holder has two choices available to him, pay everything that is owed on the card when the statement arrives or pay only a fraction of the balance each month which includes any interest. Normally this minimum payment is a percentage of the amount owed or a minimum amount set by the card issuers. Of course the interest will mount up the longer you pay the sum owed, over which can cause its own problems for many people. Owing to the huge financial risk credit card issuers take, the law requires that only people over the legal age can have one. It has become the accepted way of purchasing goods for most adults in America owing to the convenience of this method. To make things simple for the companies and users, the interest on your purchases is worked out using one of two methods; either a fixed interest rate or a variable one. Some people prefer to use a fixed interest rate but they will usually pay more if they decide on this option. A Charge Agreement requires the payer to pay the full balance monthly so they won't have to pay the interest charges, an Installment Agreement, on the other hand, asks the payer to sign a contract to repay a fixed amount of credit in equal payments in definite period of time. People that prefer to keep their finances separate from their partners may decide to use an individual credit card rather than a joint account. There are a few things to consider while making up your mind about having a credit card for instance, do you know how much you are going to spend in it every month, is the balance being cleared and what your limit on annual fees is. Ideally, you should research the types of card available before you sign up for the first one that comes in the mail. List what it is you want your credit card to do and match those requirements with the card that meets them. If you are still unsure then why not ask the opinion of your finances manager or accountant. You probably recognize many of the big credit card companies such as Chase Manhattan, MasterCard, HSBC, Bank of America and American Express although there are many more. By using your credit card carefully you will avoid the embarrassing situation where even the monthly installment cannot be met. It can also damage their credit report, and create credit problems that are difficult to repair.
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