Why do I need a Credit Card?
Credit cards are a convenient borrowing tool to use daily or for an unexpected expense or emergency. Credit cards are a secure alternative to carrying cash. Credit cards are invaluable for making hotel reservations, renting vehicles or buying products online. Since the major credit cards are accepted worldwide they are very useful when traveling. Credit cards are also a good way to establish a credit rating. There are credit cards available for people with bad credit or no credit.
What is APR?
APR is Annual Percentage Rate or more simply put the interest rate charged or the cost of credit. APR can be a significant factor for consumers when choosing a credit card. It can also be beneficial for people who want to reduce their credit card debt. For example if you are currently carrying a large credit card debt at 18%-20% APR you could apply for a Low APR Credit Card or a 0% APR Credit Card and use the money you would normally pay in interest against the debt. These Low APR and 0 Intro APR credit cards usually have a time limit on the interest rate usually 6-12 months.
What are Annual Fees?
Banks may charge annual fees for the privilege of using their card. Most of the fees are for credit cards who offer reward programs and other member benefits. Consumers who use their credit cards for most of their purchases will be able to benefit from these reward programs. Consumers who do not use their credit cards on a regular basis would do better to find a credit card with no annual fee.
What are Credit Card limits?
Your credit card limit will depend on your credit history and your income. This limit will be set by the bank but you can request an increase in your credit limit. As you develop a positive credit history your credit limit will be automatically be increased on a yearly basis. Keep in mind that this limit will also affect your ability to borrow money.
What is a Grace Period?
The grace period on a credit card is the period of time after you purchase an item before interest begins to accumulate. This period is usually 20-25 days. If you pay your credit card balance monthly you can avoid paying interest charges.
What are Late Fees?
A late fee will be charged if the payment is not received by the due date of the bill. This fee will be explained in the fine print in you credit card agreement.
What is a Cash Advance?
A cash advance is the ability to borrow cash against your credit card. Cash is available at ATM's and convince checks credit card companies send to their credit card holders. Cash advances usually have no grace period and interest applies immediately. Since this interest rate is usually 18%-20% this is not a way to borrow money long term.
