Legal Blog For Professionals

Just ask yourself: is the credit card working for you or are you working for your credit card? Most people’s answer to that question will depend on how they treat their “plastic pal” as credit cards are sometimes known. As many people with burned fingers will tell you, they didn’t realize that things had got so bad until very late, because most credit card companies try so hard to make themselves sound like a charity. Well, take it from me, they aren’t.

But this is not an anti credit card campaign. They have their plus points – in the USA, for example, if you want to hire a vehicle, you have got to have a (major) credit card. But, consider this scenario:

You receive an offer in the post that sounds great, maybe it’s a new TV or fridge. But it costs $2,000. You have a credit card with a $5,000 limit so you immediately purchase the product. Typically, here is how your repayment schedule will play out. Most credit cards charge a minimum percentage of the total balance (usually 2 percent) per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only $10 towards the principle!

Sounds scary? It doesn’t have to be. The moral of the illustration is to use the credit card very, very carefully.

Credit Cards Dos and Don’ts

There is a lot of truth in the saying that credit cards are not a substitute for not having money. Every time you use a credit card this should be the theme replaying in your mind. And you would do good to remember the following too:

Dos.

1] Always plan for the purchases that you need and those that you just want. You need the essentials, but you only want everything else. The ability to make a distinction might help you plan sensibly.

2] If caught up in financial difficulties, it’s always good to talk to the credit card issuer who might adjust your payments. If you just default, that only helps to build up an unfavourable credit history and you might find yourself being denied credit next time.

3] Unless it is an emergency, staying within your credit limits will assist you a lot. If you have to spend over the credit card limit, keep within manageable levels, say within 30 percent.

4] If your letterbox is chock-full of information on credit cards with more favourable deals than you are currently enjoying, you can always approach your issuer for a better deal. They want to retain you as a customer, so they will listen.

Don’ts

1] Do not use your credit card to purchase household items. It is very expensive in the long term.

2] Do not just pay the minimum amount. You will end up paying exorbitant amounts of interest. The quicker you are able to clear the debt the better.

3] Never use the credit card to buy items you can’t afford without the credit card.

If you are considering changing or getting a Credit Card, have a look at the free advice on our website about using Credit Cards wisely. Get a totally unique version of this article from our article submission service

Almost everyone over the age of 18 (or 21) has or wants a credit card these days and they are taken in almost every establishment. There are three major sorts of credit card in use in America. The first major sort of credit card is travel and entertainment cards such as American Express or Diners Card. These have to be paid completely by the end of the month and are generous on spending limits.

The second major sort of credit card is the bank card such as Visa, Master Cards, GM, and Ford cards distributed mainly by the banks. The bank defines the spending limit, which in bank parlance, is known as the credit line and each bank offers different terms and conditions. Banks offer a choice of payment methods: you may either repay the balance in full with no interest charges or pay the minimum (or some part of the balance) with a finance charge.

The other major type of card is the retail store card, such as Sears, J.C. Penney, Shell or Mobil. These store cards and the ones from gas companies, which are known as fuel cards, are only accepted in specific countries. They usually do not carry annual fees. There is a wide disparity in the terms and conditions for these cards.

Different types of credit cards offer different options. Some are designed for individual consumers, while others are set up in ways that work best for small business needs. To know what sort of credit card fits your needs, you should review a few options.

How to Choose your Credit Card.

Credit cards have become a part of life for most people living in the west. It’s becoming increasingly impossible to avoid them, especially for business men. So, if this is the first time you are thinking to enter into the world of plastic money, here are some of the basic things you should look out for.

First, compare the interest charged on all the credit cards you are interested in. While the rate will not stay fixed for ever, it’s always best for novices to apply for the one charging the least interest.

Read the fine print carefully, especially on the other charges that can be applied, like late-payment fees, annual fees, and whether there is a grace period which is normally given before the finance charges are applied.

You should decide what spending limit is most appropriate for someone of your income level. Furthermore, the fewer credit cards you have, the better placed you will be to understand your spending pattern.

You ought to compare the features such as the cash back incentives, guarantees, rebates and the like and check whether the card is taken broadly enough to fit in with your requirements.

You will do yourself a favour by familiarizing yourself with the following terms: 1] Annual Percentage Rate: this is the measure of the annual cost of the credit. 2] Finance Charges: these are the total charges involving the transaction. 3] Period of Grace: This is the period the issuer gives you before he starts charging you interest on new purchases. (Note that not all credit cards have a grace period).