Credit Card Information- the Selection and Use of Credit Cards
Posted: Mar 27, 2012
To hold a credit card means that you borrow money from the company or use your own saved money when the card is used. Both in order to choose that which credit card is best, and to get the most benefit from this card, it is important to have some basic knowledge about the fees, interest, costs, usage etc. In this article we present useful tips and information for those who have applied or are applying for a credit card.
Rate of Interest and the concept of yield - When the interest-free period expires on the outstanding amount will accrue interest expense. How high the costs are will vary and it is important to have knowledge of how to find credit cards with best interest rates. In this context, the concept of yield is important.
The nominal interest rate cannot strictly ignore. It only shows what the interest rate for a credit card is. It is the effective interest rate that shows how much you actually have to pay and therefore it should be the basis for comparison. Simply putting together, we can say that the effective interest rate shows the sum of all fees and interest rates. Anyone who offers credit cards are required to disclose the effective interest rate and thus it is relatively easy to compare credit cards. The same also apply for mortgages, consumer loans and the like. Note that all charges are not included in the effective interest rate.
Comparison of costs - The cost of credit is made up of interest and penalty. As mentioned, the effective interest rate is a good basis for comparing the combined different cards, but there is not any fee to be included in the calculation of this rate. This is primarily due to the fact that more charges are directly related to the use of credit cards. Fee for cash advances is an example of this. The cost of cash withdrawals will depend on the use and therefore cannot be included in the effective interest rate. Fee for reminder or cover is also such fees. Although the fee depends on the individual\'s use and willingness to pay is not included in the effective interest rate, they are of course important. All fees and costs should be considered when comparing credit cards. Emphasize the fees that are most relevant to you.
Do not withdraw cash - Basically, a credit card should not be used for cash withdrawals. Most cards have very high fees for such withdrawal and should primarily be seen as a credit card. A fixed percentage and / or fees of up to 100 million are not an unusual charge for cash withdrawals. As far as possible, in other words avoid this. Note that most credit cards do not allow withdrawals for purchase in stores. Such cards are simply not meant as regular credit cards, but first and foremost to the payment of goods and services.
Austin Ames has many years' experience in article writing and he has written many more in the past.