Credit Card ’s Talk

Credit cards are easy, right? You have a credit limit. As long as your balance isn’t as high as your credit limit, you can pay for things with your credit card. When you pay for something with your credit card, you don’t have to pay for it until later. You pay interest on your credit card balance and as long as you don’t go over your credit limit, everything’s fine.

Well, not quite. Here are some of the most frequently asked questions about credit cards - and their answers, of course.

What’s interest?

In a nutshell, interest is money that you pay a lender for the privilege of using HIS money to buy something.

What’s this about ‘interest rates’ and percentages?

The interest rate is a way of determining how much you’re paying for borrowing money on your credit card. It’s stated as a percentage of the outstanding balance on your card, usually as an APR or annual percentage rate. The lower the APR, the less interest you’re paying on the amount you owe.

Okay - so why would anyone choose a credit card with a high interest rate?

Most people don’t CHOOSE to pay a high interest rate. The bank decides what interest rate it will charge you, usually based on how much of a ‘credit risk’ you are. They determine that by looking at your history of paying bills. If you’ve got a history of paying bills on time, then you’ll qualify for lower interest rates. If you haven’t ever had any bills to pay, or if you’ve had trouble paying your bills, that will show in your credit history, too. Since it’s a little riskier to lend you money, banks will charge a higher interest rate.

One other reason that people might actually choose a credit car with a higher interest rate is for the rewards or privileges that come with that card. If the card includes special perks that you want, they may offset the higher interest rate and make it worthwhile.

My card says that I pay interest on the ‘outstanding balance’. What does that mean?

Your outstanding balance is the amount that you owe altogether on your credit card. Credit card companies generally calculate what’s called an ‘average daily balance’ for each month and base your interest charge on that. If you had a $50 balance from the first of the month to the twentieth, then charged a $400 computer, your interest will be computed on the average between 20 days at $50 and 10 days at $450.

What’s the ‘minimum payment’? As long as I pay that, I’m fine, right?

The minimum payment is the lowest amount that the credit card issuer will accept toward your balance. It varies from month to month, depending on your balance. Paying JUST the minimum balance may keep your credit card active and keep the credit card company from reporting your account as delinquent, but it will barely make a dent in the amount you owe. Whenever possible, you should pay more than the minimum amount. In fact, it’s best to try to pay off your balance in full each month to avoid paying interest charges.

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Joseph Kenny writes for the credit card comparison site http://www.creditcards121.com/ and visit credit card advice section for more advice and information on credit cards.

The simple fact of life today is that in many situations credit cards are vital. It is extremely difficult to rent a car for instance if you do not have access to a credit card in your own name. Also, shopping on line is not very easy at all if you do not have a credit card. While many websites will accept debit cards, if you are trying to book a hotel abroad or buy from any website based abroad, it can be next to impossible to find a payment method other than credit card. This is why more and more people are seeking to get credit cards, even when they have poor credit histories.

Guaranteed Acceptance Credit Cards

There are now a number of credit cards available that do not rely on a good credit history. The lenders are willing to provide these cards to absolutely everyone no matter what their credit rating may show. This is very good news for people who have bad credit ratings but still need access to a credit card. There are some important differences between these credit cards and regular cards however, so it is a good idea to be aware of the features that are different.

What?s the Catch?

The most obvious feature that people come across, and one that can surprise customers the most, is the existence of a subscription or set up fee for the card. This may be just as little as five pounds a month but can be substantially higher. There are also cards that charge an annual fee and these may prove to be better value if you plan on keeping the card for more than a few months. While customers have become accustomed to not having to pay for their credit cards, these fees are in many situations more than worth the expense given the convenience that the card will bring.

Don?t Abuse These Cards!

Another feature of these cards is that the interest rates and penalty charges for late payment are often very high. Interest rates can easily be as much as twenty five or even thirty per cent so you probably do not want to rack up too much debt on these cards. Also, if you miss payments there may be provisions for very high penalty fees and even for your interest rate to be increased. So if you are planning on getting a credit card targeted for those with bad credit, then make sure it is not something that is going to get out of hand and that you will be able to control your expenditure on it. Also, you should probably only take one out if it is for a specific necessary purpose, and not simply for occasional shopping.

Joseph Kenny writes http://www.CardGuide.co.uk, which offers some of the best credit cards in the UK.

Statistics show that the average American family owes over $8,000 in credit card debt. This is a large amount of money, especially when you consider the fact that most Americans make about $33,000 per year. The costs involved with using credit cards can be very large if you’re not responsible when using them. In this article I will discuss steps you can take in order to reduce the costs of your credit cards.

Keep The Credit Card APR Low

The interest on credit cards tend to increase at a rate which is difficult for minimum payment amounts to reduce. In the last decade many people have begun using credit cards to make large purchases and because of this the credit card industry is making billions of dollars a year, and will continue to do so in the future due to the residual income they will receive from payments made by their customers. Since the typical American only makes about $33,000 per year, it is not easy to pay off $10,000, especially when the interest continues to accrue. This puts many people into debt which make take years to pay off.

If you have an interest rate on your credit card which is higher than 19%, you will have an extremely difficult time paying it off. Because of this it is wise to avoid using credit cards which have high interest rates. If you should become late on your bills, call the company and ask if the fee can be reversed. They should reverse this charge if it is your first time being late.

Federal Bankruptcy Law

The government has also recently passed a Federal Bankruptcy law which will make it harder for people to file bankruptcy once they get in debt. If you have good credit, you can easily get a credit card which has a interest rate which is less than 10%. All you have to do is make payments on time and there shouldn’t be any problems. The problems generally start when people fail to make their payments on time. The late fees on credit cards can be as high as 30 dollars. Not making your payments on time can also cause the credit card company to raise the interest rates.

Step One To Lower Credit Card Costs

The first thing you want to do to lower the cost of your credit cards is to find a credit card company which offers the lowest interest rate. You don’t want to pay more in interest than you have to. You also want to make sure you make your payments on time. Setting up automatic debits from your bank account or using the internet to make payments is a great way to insure that your bills get paid on time. If you are making payments with checks, you should stop. They have a tendency to get lost in the mail.

Transfer Those High Balances

You will also want to move your balances from high interest credit cards to lower interest accounts. Many credit card companies offer promotions, and this is a great time to get lower interest rates. You should also use cash as much as possible. Only use your credit cards when it is absolutely necessary. You also want to pay the full amounts of your balances each month if you can. This will keep interest from getting out of hand. It would also be a good idea to avoid cash advances as much as possible.

Keeping a Clean Credit History

Doing these things will allow you to greatly reduce the cost of your credit cards. Being in debt, which you can’t get out of could almost be compared to slavery in some ways. It is ultimately the consumer who puts themselves in debt. Understanding credit cards and being responsible with them is one of the most important factors in getting good credit. Your employment and other factors may depend on your credit rating. Credit is an important part of our society, and it is critical that you understand how to manage it.

Joe Kenny writes for the credit card information site http://www.cardguide.co.uk, visit them today for more credit card articles.