What should know before taking the first credit card
Credit card is one of the important financial tools of an economy that allows users to borrow money against a line of credit popularly known as the credit limit. One needs to be careful with its usage as it has the capacity to inflict damage if not handled properly. When a person makes payment using a credit card, it is basically the bank who makes the prepayment on behalf of the customer and the customer is given a timespan within which they have to repay the amount back along with interest. The payment is typically done for the purpose of purchasing goods and services, but can also consider it for withdrawing cash from ATMs or making any balance transfer. Repayment of the credit money on time to time basis ensures the creation of a good credit score. If you are contemplating to apply for your first instant credit card here are a few things that you must be familiar with.
Credit Card: Before applying for a credit card, one must know regarding the details of it. Every credit card has different interest rates, fees, and an array of other such benefits. One cannot get the best of all these three combinations, though one evaluates and compare the features of the credit card according to their preferences and requirements before finalizing one. An ideal credit card offers lower fees, lower interest rates, and other benefits that can meet the financial obligations of the customers.
Rates and Fees: If you are a credit card user, then it is important to be aware of different rates and fees that are being imposed on the card. One of the genuine sources that can reveal the annual Credit CardInterest Rate is the Annual Percentage Rate. A transaction of balance from one credit to another may fetch a balance transfer fee. Late payment fees are charged when a user does not make the minimum payment on the credit card, within due date or time. Credit cardholders need to make these payments, or else it can have a severe impact on the credit card ratings.
Credit Ratings: Credit ratings are very crucial for any credit cardholder as it can have serious implications on the financial venture of a user. One can track his previous credit history from the credit rating firms before applying for the first credit card. This can help in getting the right credit card with added benefits, besides giving scope for improvement. Credit ratings are measured on a scale of 300-900. An average score can be somewhere around 650, while below 620 is considered inferior, above 700 is considered worthy.
Single Credit Card: There are plenty of credit cards offered in the market with added perks and benefits. One might get confused and tempted by the lucrative offers and can think to apply for a handful of these cards. The more the number of credit cards, the more will be the burden of debts on the user, and it can also land them in an adverse situation. Thus, it is perfect to choose a single credit card with features that can derive benefits for you.
Receiving the first credit card can be a significant accomplishment, but it also demands some adjustments to be made. The usage of the credit card can be either beneficial or harmful. It is wise for a user to be aware of the credit limit before making excess payment through the credit card. Reading the credit statement and making regular clearance of the debts can be helpful for a credit cardholder.
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