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Ask yourself: does the credit card work for you or do you work for your credit card? Most people’s response to that question will depend on how they use their “plastic friend” as credit cards are often known. As many people with burned fingers will tell you, they didn’t realize that things had gotten so bad until very late, because most credit card offers try so much to sound like they are actually running a charity. Well, they aren’t.

And this is not a hate campaign against credit cards. They have their plus points – in America if you want to rent a car, you have got to have a (major) credit card. But, consider this scenario:

You get an offer in the mail that sounds good, perhaps it’s a new television or fridge. But it costs $2,000. You have a credit card with a $5,000 limit, so you go out and purchase the product right away. Often, this is how your repayment schedule will work out. Most credit cards charge a minimum percentage of the total balance (typically 2 percent) per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only $10 will come off the $2,000!

Does it sound worrying? Well, it doesn’t need to be. The moral of the tale is to use the credit card very, very carefully.

Credit Cards Dos and Don’ts

There is a lot of truth in the saying that credit cards are not a substitute for not having money. Every time you use a credit card this should be the theme song playing in your mind. Furthermore, you would be wise to remember the following as well:

Dos.

1] Always plan for the purchases that you have to have and those that you just want. You need the essentials, and you want everything else. The ability to make a distinction might help you plan wisely.

2] If you are caught up in financial difficulties, it’s always a good idea to talk to the credit card supplier who might re-schedule your payments. If you simply default, that only helps to build up an unfavourable credit history and you might find yourself being denied credit in the future.

3] Unless it is an emergency, staying within your credit limits will help you a great deal. If you must spend over the limit, ensure you are within manageable levels, say within 30 percent.

4] If your letterbox is chock-full of information on credit cards with more favourable offers than you are currently enjoying, you may always approach your issuer for a better deal. They want to retain you as a customer, so they will listen.

Don’ts

1] Do not use your credit card to make household purchases. It’s very expensive in the long run.

2] Do not only pay the minimum amount necessary. You will end up paying exorbitant amounts of interest. The more quickly you can pay off the debt the better.

3] Do not use the credit card to purchase things you can’t afford.

If you are thinking aboutswapping or applying for a Credit Card, check out the free advice on our website about using Credit Cards wisely.

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Almost everyone over the age of consent (18 or 21) has or wants a credit card nowadays and they are accepted in almost every establishment. There are three major sorts of credit card common in America. The first main kind of credit card is travel and entertainment cards such as American Express or Diners Card. These have to be paid in full by the end of the month and are liberal on spending limits.

The second major sort of credit card is the bank card such as Visa, Master Cards, GM, and Ford cards sponsored mostly by the banks. The bank defines the spending limit, which in bank speak, is known as the credit line and each bank offers different terms and conditions. Banks offer a selection of payment methods: you can either repay the balance in full with no interest charges or pay the minimum (or some part of the balance) with an interest.

The other major type of card is the retail store card, such as Sears, J.C. Penney, Shell or Mobil. These store cards and those from gas companies, widely known as fuel cards, are only taken in specific countries. They usually do not have annual charges. There is a large variance in the terms and conditions for these cards.

Different kinds of credit cards offer different options. Some are designed for individual consumers, while others are set up in ways that work best for small business needs. To know what sort of credit card fits your needs, you should look over a few options.

How to Choose a Credit Card.

Credit cards are a part of everyday life for most people who live in the west. It’s becoming increasingly impossible to avoid them, especially for business men. So, if this is the first time you are thinking of entering into the world of plastic money, here are some of the basic things you should look out for.

First, compare the interest chargeable on all the credit cards for which you are eligible. While the rate will not remain fixed for ever, it’s always advisable for first timers to go for the one charging the lowest rates.

Make sure you read the fine print carefully, especially with regard to the other charges that may be made, like late-payment fees, annual fees, and whether there is a grace period.

You should decide what spending limit is most appropriate for someone of your income level. Furthermore, the fewer credit cards you have, the better placed you will be to track your spending pattern.

You should compare the services and other features such as the cash back incentives, or warranties, rebates and the like and check whether the card is taken widely enough to suit your requirements.

You should acquaint yourself with the following terms: 1] Annual Percentage Rate: this is the yearly cost of the credit. 2] Finance Charges: these are the total charges of the transaction. 3] Period of Grace: This is the length of time the card issuer allows you before they begin charging you interest on your purchases. (Not all credit card issuers give a grace period).

If you are thinking onswapping or applying for a Credit Card, check out the free advice on our web site on using Credit Cards wisely.