Introduction
The use of credit cards has become a common part of everyday life in the modern world. However, with a bit of misuse it could lead to overwhelming debt or a strained financial life. It therefore behooves users learn the basics of how to use a credit card before applying for one. Here are tips from the credit center that should help you to make wise decisions while applying for one.
Step 1
There are different types of credit cards, suited for different types of users. For instance, private label retail cards are restricted for use at the issuing service station or store, while general purpose cards can be used anywhere. A secured general purpose credit card is backed by funds you put in an account which the creditor can claim if default on your repayments. An unsecured general purpose credit card will provide you with a line of credit, based on your credit history. The credit center finds that secured credit cards are lot easier to gain approval, especially if you have a bad or nonexistent credit history.
Step 2
The average consumer holds up to nine credit cards. The credit center finds that couple of general purpose credit cards should be sufficient to meet the needs of most consumers. If you are looking for a retail card, make sure that it’s a store that you shop from frequently and also has incentives for using the credit card.
Step 3
Tcredit center advices card users to evaluate the interest rate charged on your credit card. The credit center finds that the interest rate charged on a credit card can range dramatically, from 0 %, limited time balance transfer offers to as high as 30%. Credit card issuer will commonly consider the applicant’s credit score, current debt load, income, payment history, assets, credit inquiries and current economic conditions to determine the annual percentage rate (APR) on a credit card.
Step 4
The credit center advises consumers with a bad credit score to work on improving it, so as to obtain a low APR on their credit card.
Step 5
Different types of lenders will charge different rates on their credit cards and stipulate different policies on how to use them. For instance, banks, retailers, credit unions, and credit card companies all have their own unique offerings for credit cards. The credit center advises consumers to consider these different offerings, in order to obtain the best interest rates and terms and conditions of use.
Tips
Users should be aware of the rules stipulated on the credit card agreement, since it is a binding contract. The credit center advises consumers to familiarize themselves with all the facts and figures on how they should use the credit card and the recourse the credit card issuer will take if they are unable to comply with the rules stipulated on the agreement.
Sources and Citations
Credit card users should also remember that they have the right to fair treatment. The Fair Credit Billing Act provides consumers with the right to contest any errors that may have happened in their report. The credit center advises consumers to seek an explanation from their credit card issuer on any terms in the contract, which they do not understand.
