What To Do With A Credit Card

By Sven Larsan

A credit card is a big decision, though so many take it for granted. It's important to know what you want out of your card and what you're going to use it for. How will it affect you if you can't maintain it properly? And what are the benefits if you learn self control with your credit?

Many people equate a charge card with a credit card. They are actually two different types of cards. A charge card comes with a balance that has to be resolved each month. A card that comes with credit has a balance that revolves. Each month the charges are added up and sent to the cardholder on a monthly statement.

A revolving balance means the balance will be handled month to month according to the minimum payment the card holder agreed to. The best way for a credit card to ensure users will pay the minimum balance is to charge an interest rate. This means that a percentage of the money that is owed on the card will be added to the total balance. There are ways to get around this but they often involve certain purchases.

Some credit accounts allow use of the card like it is a debit card. It can be used to take money out of bank machines or ATMs. It can also be used at any Interac machine for any other purchase, such as groceries, shopping or buying a car. It depends only then on the balance left on the card.

If a person were able to control use of their credit card, they might be able to start obtaining good credit. By carrying a positive balance for several years, a person's credit history would look very good. This kind of credit history helps when it comes time to lease a new car or buy a new home. Banks examine everyone's credit history and see where they have proven themselves as able to handle credit and trust in the past.

A credit card can be very useful in many different ways. With how much of today's shopping is focused on the internet, a card with credit can be used to make online purchases. Some MMORPGs or multi-massive role-playing games will only take cards as payment each month. Other services require monthly billing as well, which can be put onto a card. Few places online like to accept cash. Paying with a card gets immediate service.

It is easy for people to fall into the trap of convenience that a credit card offers. Without responsible use, it can become a drain on a person's finances. It's very important to see that a card with credit is a privilege. The cardholder is also under a legal obligation to fulfill the terms of a contract that is very binding. A card, used maturely, can be a plus to a person so long as they maintain vigilance over their spending habits. - 32519

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