Your Best options to apply for Credit Cards
Credit cards have almost become a necessity in society. However, credit cards can become a burden if used improperly. Understanding what types of consumer credit cards are available, and how to use these cards to your advantage, will allow you to use your credit cards wisely.
Different Cards That Are Available To Private Consumers
• Low Interest Credit Cards. These credit cards are the most desired cards on the market. They have very low interest rates, making them very attractive to consumers. These cards are often reserved for those with superior credit ratings. However, some credit companies will issue cards that offer low rates for a limited period of time. The good news is, anything you charge at that rate will remain at that rate until it is paid off.
• Balance Transfer Cards. This type of credit card offers a low interest rate on any balance that is transferred to the card. Interest rates on any transactions made with the card will be at a different rate, verify for your own knowledge. Use these credit cards to transfer large balances from cards with higher interest rates. This will significantly reduce your debt burden.
• Rewards Credit Cards. A reward credit card will give you points every time you use the card, according to the amount charged. Depending on the program you may receive 1 point for every dollar or 1 point for every 5 dollars spent. These points can be redeemed for gift cards or merchandise. It is important to find out if there are expiration dates on your points. Make sure to use them before they expire.
• Cash Back Credit Cards. Much like the rewards card, you will receive a percentage of your charges back as cash. Most companies give a 1 or 2% return. Cash may be given in the form of a check or applied to your balance as a credit. Verify details of the program with the card issuing company.
• Airline Miles Credit Cards. Airline credit cards reward you with “miles” when you make a purchase. You can save these miles and use them for free airline tickets, upgrades or discounts. Make sure if you select a card of this manner you understand their redemption policy. Some cards are only good at specific airlines, and some companies only allow you to cash in so many miles per year.
• Instant Approval Cards. Instant approval cards have become rarer in the last few years, but still exist in some forms. You may need to have very good credit to be approved for instant credit. Some companies that issue instant credit will charge a higher interest rate on their cards. They justify this by granting you instant credit, instead of making you wait for the arrival of your card.
• Prepaid or Debit Cards. Prepaid cards do not require a credit check, nor do they charge interest. Money must be deposited to the card to create a balance. Consumers can use the card just like a credit card. Transaction fees are associated with these cards. Some cards will charge a monthly or yearly fee to use. These cards are very good for people to use to keep track of their money while they are trying to re-establish credit.
• Credit Cards For Bad Credit. It is possible to re-establish credit with one of these cards, but consumers must be very careful. There are legitimate cards for people with bad credit, and then there are cards that will just cause more debt. Bad credit accounts will have a higher interest rate due to the risk associated with issuing the account. However, you should watch very carefully to make sure that these rates are not exceedingly high. Another thing to watch for is service charges. Some bad credit issuing companies will charge ridiculous fees, equaling almost the same amount as the credit line. Consumers than receive a credit card that they must begin paying on, that is already to the debt limit. There are companies that will charge a fee for these cards, but it is relatively small.
• Student Credit Cards. These credit cards are often issued to college students that are trying to establish credit. It is very important to watch the interest rates on these cards. Some companies will require that a parent co-sign for the account in case there is a chance for default.
• o% APR Credit Cards. These rare gems should be taken advantage of when you receive them. If these cards allow balance transfers, do so immediately, it will reduce your debt. Any charges made during this grace period will remain at 0% until that portion is paid off. Therefore, these cards are great to make large purchases with. Keep in mind, the 0% rate will only be temporary. Verify what the interest rate will be once the introductory period has expired.
• Business Credit Cards. Credit card companies have been issuing business credit cards to private consumers for the last year. It is a growing trend that private consumers should avoid. While these are the perfect tool for any business owner, that receives protection from business insurance for any losses it may incur, a private citizen is not protected when using these cards. Business credit cards do not fall under the same protections as consumer credit cards. They are not protected by the Fair Credit Reporting Act, nor are they protected by any fraud laws. Unless you are in business, you should avoid these types of credit cards.
When you apply for a credit account you should take the time to read all the information the issuing company provides. Find out if there are any annual fees to hold the card. Verify late payment and over the limit fees. Some of the higher risk credit cards may demand that the car be enrolled in an automatic payment plan. Credit companies must also disclose their billing cycle. 30 days is no longer the standard. This will help you gauge when your bill will arrive, and when it must be paid.
Aim to pay your credit card bill at least two days before the due date. This will alleviate any chance of paying late fees. Late payments will also generate bad marks against your credit, making it harder, or more expensive, to establish credit in the future.
Credit cards were created to make our lives easier. By understanding how each type of card works, you will create a good credit experience for yourself.
