Credit cards can be a source of security when used for their optimal purpose. They are also widely available because the great majority of consumers fall into the great credit card trap. Yes, the credit card companies are aware of this and our need to spend! They can be very helpful, however, and even build your credit history for the better.
Today, young teenagers are being given credit cards, through parental accounts. Most eighteen year olds are eligible to obtain a credit card in their own name. Credit card companies often seek out potential customers through telephone soliciting or mail. They seek us out because they are almost guaranteed to profit from our business. The best way to choose a credit card company is to understand their policies and compare several choices before making a committment.
Interest Rates
Credit card companies vary widely on their credit card interest rates. The easiest credit cards to obtain will generally have the highest rate, and it can be staggering to realize that it can take years to pay off the balance of a high interest credit card bill with a high rate. Persons with a bad credit history are often left with such companies to find credit with, as well as young credit card holders.
If you have a bank account locally, it can be an advantage to getting a decent rate with their credit card service. Not always though. The bank that we hold most accounts with offered a high 19.8% rate for our credit cards.
Be on the watch for low interest offers from competitors! Many companies will offer temorary low rates for balance transfers from other companies. My new Discover card transferred my balance for a 1.9% rate for 3 months, and then the rate is still lower than the original one was.
Pitfalls
There are always pitfalls with credit cards. Many are often written in the fine print in the user agreement, and need to be looked at carefully. A typical example would be the high charge for a late payment. Many credit card laws and policies follow the laws of the state or country they are based in, or the area in which you live. Pay attention to the rules before using a credit card.
Aside from various penalty charges that may be possible, there is always the problem of earning a bad credit history. Life can sometimes throw some curve balls, and even in the most financially secure households, there is always a risk associated with having outstanding credit card balances. It is easy to charge with the handy plastic credit card and the great majority of users will tend to spend more than they can pay back in a month, over time.
Benefits
Credit cards can also be a lifesaver when emergencies arise. I personally prefer to pay with credit card when traveling, rather than carry large amounts of cash. Internet shopping is also easy to do with an active credit card. When choosing a credit card, it is important to find one that will cover any stolen card expenses. Many will cover the amounts over$50.
For most adults, a credit card is nearly an essential part of life. Many hotels and car rental companies require a valid credit card. Choosing a credit card that has a competitive interest rate and a well known name is important. Some credit card companies will even offer cash back opportunities. Take advantage of owning a credit card and pay your balance off each month to make benefit the greatest!