The Many Views about Credit Cards
What are credit cards? Not everyone sees credit cards in the same way. Some people think it’s just another tool for convenience while others see credit card as an important means of getting by especially during emergencies. Some people mistake credit cards as debit card and charge cards but in reality although they may all look like the same plastic cards, they do have differences in use and system.
Are credit cards debit cards too?
No. A credit card is not necessarily a debit card. For instance, you cannot use a credit card in an ATM machine to obtain cash. Only debit cards can do that. However, today there are credit cards that function both as a credit card and a debit card at the same time. In this case, it is possible to use your credit card with an ATM machine to get the cash you need.
Are credit cards charge cards?
What about charge cards? Though people call them credit cards, a charge card is different because it requires the credit card holder to pay his balances in full every month. With a credit card, the card holder has the option to pay his balances in installments with interest. However, in some cases credit card companies allow the card holder to pay for his balances in installment basis without incurring any interest charges.
Line of Credit
Every customer who has been approved to have his own credit card account is given a line of credit. The line of credit or credit limit pertains to the maximum amount of purchases that he is allowed to incur on his account. When a credit card holder exceeds his credit limit, he will be charged with penalty fees on account that he went past his maximum credit.
The Deadline of Payment
When a credit card holder makes purchases, he is expected to pay those purchases in full or installments each month. A statement of account is sent to the owner of the credit card which contains the purchases and the total balance he incurred for the month. In turn, the card holder must pay his balance on or before the due of his scheduled payment date.
If he won’t be able to pay on or before the deadline, he will be charged with an interest which shall be added on his balance for the next due date of payment. Thus, not paying balances on time puts the credit card holder at great risk of being stuck in bad debt. On the other hand, if a card holder dutifully pays his balances on time, he won’t have to worry about paying for any interest.
Grace period
The grace period is the number of days that a customer is given so he can pay his balances before he gets charged with the interest. A grace period depends on the credit card company and on the type of credit card you obtained. Some credit cards give 20 days while other credit card issuers give as much as 55 days to their customers.
Types of Credit Cards
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Today, many types of credit cards have been introduced in the market. Aside from regular credit cards, there are also special Rewards credit cards, Travel Miles Credit Cards, Gas Reward Credit Cards, and non-bank Credit Cards. Business credit cards are also becoming popular among credit card users especially those who own a business. Even business credit cards are divided into categories such as corporate credit card, small business credit card, and new business credit card. These credit cards are created to match the specific needs of different credit card users.
Different credit cards also have different terms and conditions. Aside from the features discussed here, there are other terms that a credit card holder needs to inquire about. Thus, research is needed when planning to apply for a credit card. In summary, a credit card can be bring you great convenience and may also come in handy when emergencies arise. But in order to benefit, all credit card holders are advised to learn the value of managing their credit effectively.
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Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2010 |