credit-card

What is a credit card

A credit card is a plastic card that is issued by the bank that allows you to make payments to buy on the card and pay the bank later. It is a rather convenient option for most people especially when they go shopping because it negates the risk of carrying money in large amounts about. It is especially convenient because it allows you to have access to money when you really need it. The money is credited and can be repaid with no interest at all in most cases.

Most credit cards have the benefits of free credit, reward systems, cash back etc. that promise a lot to the customer. It is essential to not get distracted by all of the attractive offers and choose one that best suits not just your needs but your financial capabilities as well, as well as the age, occupation and location.

There are a plethora of options when it comes to choosing the right credit card. Banks everywhere offer multiple sorts of pay back options that have made them more famous than ever before.The following are what you must consider before getting a credit card:

Interest rate: it is levied on your outstanding amount by the bank. Different banks offer different rates of interest and so, the cheaper the interest rate, the better.

Grace period: The periods where there are no charges are levied (between the statement date and the due date). This also varies from bank to bank and the longer the grace period, the better for you.

Annual fee: that and the joining fee is the staple amount of money that needs to be paid every year to be able to use the credit card services.

Rewards etc: look out for rewards and other benefits like points that may be exchanged for something later. Often they are truly beneficial services like hotel accommodations, cash back offers etc.

Credit cards are extremely beneficial when it comes to short term financial needs, but since they have high charges, the likelihood of falling into debt is huge. They must be used carefully and judiciously because they could destroy a person's credit rating. The most common mistakes that people make when dealing with credit cards is that they do not realize that whatever they spend on credit should be paid by them. This usually results in the person owing the bank a large amount of money because of reckless spending.