Types of Credit Cards and Choosing One
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 main sorts of credit card in use in America. The first major type of credit card is travel and entertainment cards such as American Express or Diners Card. These have to be repaid in full by the end of the month and are generous on spending limits.
The second major type of credit card is the bank card such as Master Cards, Visa, GM, and Ford cards sponsored mostly by the banks. The bank defines the spending limits, which in bank speak, is known as the credit line and each offers different terms and conditions. Banks offer a selection of payment methods: either pay the balance in full with no interest or pay the minimum or some part of the balance with a finance charge.
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 issued by gas companies, which are usually known as fuel cards, are only accepted in specific countries. They hardly ever carry annual charges. There is a wide disparity in the terms and conditions for these cards.
Different sorts 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 kind of credit card fits your needs, you should review a few options.
How to Select your Credit Card.
Credit cards have become a part of everyday life for most people who live in the western countries. It’s becoming increasingly impossible to avoid them, especially for business men. So, if this is the first time you are about to enter into the realm of credit cards, here are some of the basics you ought to look out for.
First, compare the interest charged on all the credit cards you are interested in. While the rate will not remain fixed indefinitely, it’s always better for beginners to go for the one charging the least interest.
Make sure you study the fine print carefully, especially with regard to the other charges that can be applied, like late-payment fees, annual fees, and whether there is a grace period, which is normally given before the finance charges kick in.
You should decide what spending limit is most suitable for someone on your income level. Furthermore, the fewer credit cards you use, 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 accepted 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 period of time the card issuer gives you before they commence charging you interest on your purchases. (Not all credit card issuers allow a grace period).