What to Remember When Getting a Credit Card
Those who haven’t had a credit card before will have to consider several things before getting one for the first time, especially since it’s a significant milestone for them. Credit cards are convenient plastic cards that people can use to borrow money from the bank as long as it’s within their line of credit.
Emergencies like the current COVID-19 pandemic have made it difficult for people to purchase items since many people are locked down in their homes or do not have buying power due to their lack of cash. People can make online purchases during the quarantine with their credit cards, and it’ll be significantly convenient for them since they won’t have to handle any cash. One can say that credit cards can support people in case of unprecedented emergencies.
To ensure that you can afford to get a credit card and that you can be sure to use them properly, you’ll need to remember the following before getting a card.
Your Spending Habits
Before choosing which card to get, people must first know how they intend to use it. Different credit cards have varying interest rates, fees, and credit limits, so it’s essential to consider them when getting a card.
- The card’s interest rate won’t matter when a cardholder is confident that they’ll be able to pay the credit card bill. It’s advisable to look for a card with no annual fee and an extended grace period.
- People should look for a card with the lowest possible interest and low introductory rate if they think that they’ll likely carry a balance.
- A credit card with a generous amount of credit limit and a decent rewards program is suitable for people who are planning to purchase items with the card.
- The most suitable credit card for emergencies is a no-frills card with low-interest rates and fees.
Considering one’s spending habits is essential so that people won’t have to worry about paying hefty fees and having to pay high interests. A credit card with a low credit limit won’t be useful for an individual that needs to purchase many items.
The Interest Rate
It’s advisable for those who’ll get a credit card for the first time to look for a card with low-interest rates in case they can’t pay the monthly bill in full. Considering the interest rate before getting a card will keep a cardholder from unexpectedly having to pay higher monthly bills due to the resulting interest.
A low-interest credit card doesn’t have plenty of perks or promotions but is more focused on creating a no-frills approach to a card. Such cards are excellent for emergencies since people will not have to pay high interest for their emergency purchases.
In ordinary days, people will be able to avoid interest as long as they pay their monthly bills in time.
The Credit Limit
With a credit card, people borrow money from the bank, and the amount of money that the bank will allow, or the credit limit, will largely depend on one’s credit history. When possible, it’s advisable to look for credit cards with high credit limits. However, such cards likely come with high-interest rates.
Should cardholders max out their credit limits, their credit score will be affected negatively, and their credit limits can be cut down to a lower limit by their credit card issuers. Cardholders will also have to pay a penalty fee if they go over their limit. Some banks even deliberately approve transmissions that go over their limits so they can charge a penalty fee.
Credit Card Fees
Credit cards come with various expenses that will depend on the type of card one will get, the conditions attached to the card, the individual’s financial history, and the credit score. Those with favorable credit scores will likely pay lower fees than those with bad credit scores.
The annual fee is the most common fee that credit cardholders will have to pay every year. The amount of the annual fee will vary from bank to bank, but it will likely depend on the perks that the card offers. The more perks there are, the higher the fee will be.
The late fee applies to those who used their credit cards to purchase items but weren’t able to pay for them. The fee is added to the cardholder’s total balance and will be charged with interest as a result. The current COVID-19 outbreak and quarantine resulted in many people being unable to pay their credit card fees, which is why banks have offered a grace period for their cardholders.
Interest is one of the high costs that cardholders have to pay, and they incur this when they fail to pay their fees by the due date. Some credit cards have low-interest rates, but only those that have high rates have good perks.
It’s essential to look for a card that offers reasonable fees, especially since it’s how credit card issuers make money. Getting a card with reasonable fees is better for cardholders that those that offer great rewards for significantly high prices.
Rewards and Benefits
Credit cards have various incentives for cardholders, which effectively entices them to get a credit card instead of continuing to use their cash or debit cards. Holders can make the most out of their advantages by making sure to use their cards wisely and to pay their loans and fees on time.
Continuous responsible use of credit cards will result in cardholders reaping loyalty points that they can use to buy goods. Some loyalty rewards can include discounts for stores and money back on purchases.
Another benefit of using credit cards is seen when compared with using debit cards for transactions. There’s less risk with using credit cards for purchases than debit cards when it comes to potential fraud cases. Cardholders can identify fraudulent transactions by regularly checking their statements to track their payments, and all they’ll need to do is to report them to the bank to cease further unauthorized purchases.
Many credit cardholders also wish to build up a good credit history so they can have an easier time applying for loans in the future.
Getting a credit card will allow people to enjoy the convenience provided by such cards when they can’t afford to handle cash, especially during the community quarantine in Luzon. People will only need to use their cards responsibly.
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