Intro
Basicsics
Introduction
The Basic Credit Card Types
High interest rates Unfavorable interest calculations. A credit card may calculate interest charges based on average daily balance, not on the balance due. No grace period. Some credit cards might charge interest from the date of purchase until payment date, even if you pay off your balance. Nuisance fees. Try to do away with credit cards that have late-payment fees, over-limit fees, fees for not carrying a balance or only a balance below a certain level, or a percentage fee on your credit limit.
The modern bank credit card was first introduced in the 1960s by the Bank of America; the travel and entertainment credit cards were both introduced in the 1950s. Much may changed since then in terms of features and benefits, but the basic characteristics of each type of credit card have remained the same.
Risks In Having And Using Credit Cards
Many people consider that credit card is a symbol of wealth and it can be a wonderful financial tool that offers great benefits for those who utilize it to their advantage. If you have strong self discipline to clear off your outstanding every month, holding a card makes a great financial sense to you. However, temptations to overspend and live beyond one’s earning ability are the main risks that cause the card holders to be burdened by deep debt.
Purchasing online and swiping the credit card during shopping are really easy tasks and you are definitely enjoying the moment. However, if you don’t have the ability to pay for the amount you swipe based on your current income, within a short period, you will find yourself drowning in debt. Not being able to pay back on time can lead to the damage of one’s creditworthiness and it is hard for obtaining other loans in the future. Although you won’t be sued for bankruptcy by the banks as credit card debt is an unsecured debt, it is hard for you to obtain any financial aid for other important purpose and the possibility to be blacklisted by the banks and financial institution is high.
Besides, you may also face the risk of identity theft. This happens when someone may obtain your credit card details and use them to make purchases online on your behalf. The purchases may be huge amount and you will be facing difficulty to prove that you never make the purchase. Normally in this type of situation, you will not be able to use your credit until the detailed investigations are done by the bank or credit card companies. Although the banks will not hold you responsible for such transactions, it is troublesome and time consuming for you to settle the case.
How To Protect Yourself From Pre-Approved Credit Card Offer
Have you received before a pre-approved credit card offer that sent to you through your email address? If you are not, then you are the lucky one. Most of people who have access to email are receiving dozens of “good offer” from credit card companies. Low-internet rate and higher credit limit are among the good deals in the offers and the best part is: it has been pre-approved to you. Sound good? Well, before you go ahead and accept one. Ask yourself whether you really need it or not. According to the credit card site CardWeb.com, average American household are holding a $10,000 credit card debt. Don’t let you be one of the statistics.
The best way to keep credit card debt down is not to use a credit card. But if you do receive a pre-approved card that intrigues you, at least know what you are getting into before signing on the bottom line:
What interest are you paying? Make sure you understand the interest rate you will be paying for. There are two types of interest rates, fixed-rate annual percentage rate (APR) and variable rates that swing according to the market rate. A better option would be APR because credit card companies have to notify you before raising rates.
Consumers Could Pay More if the European Commission Caps Credit Card Fees
The European Commission (EU) has threatened to cap the credit card processing charges that banks impose on businesses and shops. In turn, the banks have threatened to add higher fees and other charges onto cards used by consumers. When it all finally boils down, it’s likely that UK households will take another hit in their billfolds.
As it stands now, credit cards like MasterCard and Visa charge businesses a 0.9 percent charge on all credit card purchases. This credit card fee costs businesses 850 million annually. The charge in debit cards is 0.2 percent. The EU wants to set a flat service charge fee of 0.3 percent.
On further examination, this matter gets more complex. The fees that businesses pay to banks are known as interchange fees. These fees cover the bank’s costs of processing credit card transactions such as fraud insurance and administration. Shops and businesses give banks different interchange fees based on size. Big retailers generating tons of sales tend to pay a smaller interchange fee. A mom and pop store will pay a larger interchange fee. These fees can vary from 2.5 to 0.1 percent.