Discover What Credit Cards for Dummies Can Teach You about Credit Card Usage
Credit cards are convenient financial tools that carry a heavy responsibility. If credit cards are not handled properly they may end up doing more harm than good. Consumers who aren’t aware of the proper use of these cards could damage their credit rating or create a debt larger than they can repay. In this credit cards for dummies crash course you will learn the three basics to acquiring and using a credit card properly.
Credit Cards for Dummies Step #1 – Credit Card Qualification
Just because your mailbox has been full with credit card offers doesn’t mean you should grab a pen and just start applying. That is a credit cards for dummies no-no. These offers are sent as an enticement, but applying, qualifying, and using a credit card works much differently.
To apply for a credit card you must be at least 18 years of age with a regular source of income. When applying for any credit one must have an established credit. For example credit can be established through any recent loans. Previous credit history or not, it is important to know your credit history. You can obtain an accurate score through the three major credit bureaus Equifax, Experian, and Trans Union.
Credit Cards for Dummies Step #2 – Credit Card Selection
Now that you are aware of your credit history, you are ready to find the right credit card for you. The best credit card for dummies lesson to be learned is that all credit cards are different. Each card offers different fees, benefits, and charges to card members. Consider a few points when shopping around for the perfect card such as:
- Annual Percentage Rate (APR)
The APR is the calculated annual interest rate for your purchases. Check any introductory offers for first time applicants but research the standard rate. This is the rate that will be charged to any remaining balances you have on file at the end of each billing cycle.
- Grace Periods
This is the time between the date of your purchase and the date the interest will begin to be charge on that purchase. If the card you select has a standard grace period, then you could avoid any finance charges by paying the entire balance. If there is no grace period, then the issuing bank can implement a finance charge to you from the date of your purchase.
- Annual Fees/ Transaction fees
Some credit companies will charge you an annual fee for granting you credit. There may additional transaction fees including charges for each cash advance, late payments, and exceeding your credit limit. A good credit cards for dummies student always invests their time in reading the terms and conditions of credit card agreements to be aware of such fees.
Credit Cards for Dummies Step #3 – Use the Card Responsibly
There are certain beginning rules in this credit cards for dummies crash course. When the bill arrives, take the time to go over the transactions. Compare the transactions with your saved receipts. Question or report any unauthorized charges on your monthly statements. Make sure to never purchase more than you are prepared to repay. If you are unable to repay your full amount you will be charged an interest rate for the remaining balance.
If you continue an outstanding balance on your card you may see a dip in your credit score. The minimum payments you are paying only covers the interest rates and reflects poorly on repayment of debt.
The most important lesson in this step from credit cards for dummies, is to pay the bill on time no matter what. If you can only afford the minimum balance, then make sure you pay it on time. Delinquent payments will hurt your credit score more than a continuing balance.