Credit Cards

What you need to know about a credit card.

Frequently asked questions about credit cards.

What is credit? What are the forms of credit? What are the costs associated with having a credit card? What determines how much credit a person gets?

These questions are always asked by young adults every year when they turn the magical number of 18. They're are out of high school, working, probably moved out, and hopefully in college. But many of these people don't know what credit is. Credit is the ability to get goods or services with money you probably don't have and promise on paying it back, after the After Payment Rate of course. But APR isn't some fixed number, its a percentage of what you've spent that you must pay back to the bank. Whether or not you paid the bank, those records get sent to a credit bureau where they check your credit score to determine your creditworthiness and send a report to any bank or business dealing with anything financial towards. That score can also affect whether or not you are eligible for more credit cards and loans from almost anywhere. Keep in mind that credit is one of those things that follow you for the rest of your life.

Additional things to keep in mind

inflation- level of prices of goods and services in the economy

(Inflation may rise the prices of goods which in turn the bank could increase or decrease the amount of credit it may give on a person)

check register- a journal to record your spending and savings

(No matter how advanced we can get, a check register, if done correctly every time, will be the most up to date statement you will have. Some credit card payments online may take up to a day to get processed)

overdraft- When you withdraw money from your bank account and your balance goes below zero.

overdrawing- taking out too much money from your bank account than what the account actually has.

(The next two go hand in hand. If you withdraw too above your line of credit, you can receive some charges and you can't spend any more than what your credit allows)

endorsement- signing a document which allows a legal transfer of money from the payer to the payee

(Whenever you make huge purchases (i think above $20) you have to endorse the payment by signing,)

What you need to know about credit cards

  • What is credit?
The ability to buy goods and services with the promise of paying everything back along with an After Payment Rate. You are also restricted by a credit limit which sets a cap on how much money you can use.

  • Where can I use a credit card?
You can use a credit card anywhere that accepts your credit card such as a Visa or a Master Card. They also must have an electronic card reader.'

  • What are the benefits and costs with owning a credit card?
The benefits of owning a credit card are is the actual credit. If you continually make payments towards your credit card, your line of credit will increase which will allow you to make important purchases such as a car or a new house. The downside of credit cards is that you are required of paying a annual fee every year and if you go above your line of credit pay an over the limit fee. There are a lot of fees associated with credit cards but you can overcome them by improving your credit.

Credit Card Safety : The Right Way

A piece of plastic holds most of your financial life. It can include checking, savings, and retirement funds at the same time. But what can a newbie do when they've just received their credit card? A great way to use it safely is to only pull it out when you are making a purchase and not waiting in line. But that's for outside forces. The main issue is OURSELVES. To begin, its a credit card, not your money. Just because you have $3000 of credit doesn't mean you can blow it off on a new TV, and a Xbox, a new microwave, etc. You are being lent that money and will ultimately be accountable for the money owed plus interest. A great safety tip is if you're a compulsive shopper, its best to leave the card at home so you don't go overboard. The banks don't care if you spent the money or how you spent it, they just want their money and interest back. Another great tip is to use it when there is always an emergency. Things happen, we can use credit cards to fix it immediately and we can pay it back little by little. Finally, don't apply for more than one credit card. The average American has 8 credit cards. Why do we need all those cards when we can use one. And who knows, most of those credit cards come with inactivity fees and annual fees.