When you hear of credit cards, what comes to your mind? For many people, it a catastrophe of numbers as they stare in disbelief at the balance, as if some fiscal Mr. Hyde had gone on a manic spree of shopping of virtually whatever he can get his hands on. For one thing, shopping with credit cards is different. This is because you do not see the money, all you have to do is give out the card and you get the card back. However, in reality, more than money has exchanged hands. As you may realize, shopping with credit cards may spell more trouble for your financial problems than dealing with cash, and for good reason.
The most widely used and honored cards are MasterCard and Visa, but they are far from the being the only ones. Credit cards are issued by financial institutions and they usually carry a $15 to $25 annual fee. However, depending on the credit history of the customer, this fee may sometimes be waived. His or her continued use of the card will also determine the interest charges and other iscellaneous?fees. In most cases, if payments are made in full, then no interest is charged. However, when a customer decides to pay in monthly installments, this will usually result in high interest charges. Again, depending on the applicant’s credit history, the financial institution will stipulate the spending limit of its customers. As you demonstrate your ability to pay, this spending limit is raised or lowered.
Using credit cards also has the advantage of allowing one to secure cash advances from automatic teller machines. However, there is a flip side to this. Obtaining cash this way is usually a costly affair. In fact, approximately anywhere between $2 and $5 are charged for every $100 borrowed in this way. What is more, interest on this cash is accrued from the day you withdraw the cash. Other institutions that offer credit cards include store chains, oil companies and travel and entertainment establishments. While some of these may not have any annual fees, the interest charged due to failure to pay in full any credit accrued may be much higher than that charged on bank cards.
From the above, it is therefore prudent to consider and wheigh your needs and options before obtaining a credit card. According to the Federal Reserve System of the U.S Government, you should take note of the annual percentage rate or APR, the annual fee, grace period, over-the-limit fees, late-payment charges as well as the cash-advance fees before applying for a card. You will save yourself some cash and a lot of heartache in the process.