A credit card can be a useful tool for establishing and building a credit history you can later use to secure car loans, home loans and other benefits.
It can also help you to improve your quality of life in the present moment while you work to establish your financial future. There are many different kinds of credit cards you can choose from, each with its own features, benefits and drawbacks compared with other cards.
Among the most popular types of credit cards are business, balance transfer, cash back and low-interest credit cards. Features to compare between them include interest rates and finance charges, bonuses and rewards and fees and penalties.
Before applying for any credit card, check your credit reports first to make sure all the information they contain is accurate and to discover any negative marks you can fix.
The information in your credit reports is used to calculate the credit scores most credit card issuers use to determine your eligibility for credit. It also helps creditors decide whether to grant you a card at all and, if so, with what terms and how much of a limit.
Finding the right credit card can make the difference between a successful and unsuccessful experience using credit for your betterment. To find the right credit card for you, start by examining your needs and circumstances. How do you want to use your credit card? How much can you reasonably afford to spend on monthly payments?
The answers to these questions can give you an idea of what sort of credit limit, interest rate and payment terms you may be seeking.
Knowing the types of purchases you plan to make with your card can also help you determine whether some sort of rewards card might be appropriate for you. Many types of credit card can offer rewards, so make sure you do not overlook the opportunity to get something extra for your business other than basic credit card terms and features you seek.
Finally, if you have poor credit, you can still get a secured credit card that allows you to build and improve your credit by making charges with the card against a cash balance you have deposited with the issuer.
If you run a business, you may prefer a business credit card over a personal one. Business cards may not eliminate your personal liability for your business expenses, although in certain circumstances, they can. Regardless, they most certainly reduce your personal liability for business costs while helping you to keep your accounting clean and easy while giving you access to a potentially much higher line of credit.
Business credit card rates, terms and fees may be considerably different from those for personal cards, so compare carefully. Take a sole proprietor of a small business, for example. It is easier for the owner to use his or her own Social Security number and simply keep a separate credit card for business expenses. The owner of a larger business with a sizable staff, however, may prefer a business card so he or she can distribute monitored and controlled employee cards to staff-members who make purchases for the business.
Transferring a balance from a creditor with a high interest rate to one with a low interest rate naturally helps you to save money overall on the balance until it is paid off. Consolidating multiple balances with different interest rates into a single credit card with one interest rate can also help you to more easily manage repayment of your purchases.
It gives you one reasonable payment to make each month rather than multiple payments that, while each may be reasonable on its own, together add up.
A balance transfer card is any credit card with a generous balance transfer rate and terms. Sometimes, an issuer will offer a special promotional zero percent APR on all balance transfers made within a certain period after becoming a new cardholder.
In such a case, it is worth noting what the interest rate becomes after the promotional period expires. Other balance transfer cards simply offer low rates and accommodating terms indefinitely. Many credit cards usually charge fees of three to five percent on all balance transfers. Finding a balance transfer credit card or promotional offer with no balance transfer fee can be helpful in reducing your cost of consolidating credit.
One of the most popular types of rewards a credit card issuer may offer is cash back on purchases. Some of these credit cards offer cash back on all purchases while some restrict the incentive to certain purchases. Moreover, the cash back rate offered for purchases may vary depending on the type of purchase. Cash back rewards may be unlimited, meaning they accrue on all purchases without end.
Others are limited, meaning you can only earn up to a certain amount of cash back on particular types of purchases during an individual rewards period. Read carefully the rules and restrictions of any cash back credit card you are considering getting before you apply for it. Typically, when you redeem rewards from a cash back card, the funds are deposited into your bank account. Many cash back cards, however, offer alternative options like redemption for travel or gift cards, sometimes even at improved redemption rates.
The interest rate charged on your credit card can be one of the single most influential factors in how quickly and easily you can pay off your debt and how much it will cost you overall to do so. Many low-interest credit cards offer a low interest rate promotionally when you sign up that later dramatically increases to a much higher rate.
Other credit cards come with a fixed rate that remains unchanged. You can find competing low rates on all sorts of credit card types, including business and personal cards alike, as well as rewards cards like cash back credit cards.