Within this article we offer advice and guidance to the reader when considering signing up for a credit card, and ways in which you can ensure you are getting the best deal.
You always needto take a number of very important things into consideration before signing upfor a credit card. Credit cards are serious business one wrong move and a fewlate or missed payments and you can do damage to your credit rating that takes yearsto correct. Likewise, you always want to make sure that you know exactly whattype of credit card youre signing up for. Though one may operate similarly onthe surface to the next, each type of credit card often has its own quirks thatyou need to be fully aware of before you start making charges. The only thingworse that missing a payment for a legitimate reason is missing one because youdidnt actually understand how your credit card worked in the first place.
One very populartype of credit card, especially to new lenders and those with poor credit, arepre-paid cards. Pre-paid cards operate similarly in concept to a regular debitcard in that your credit limit is tied directly to a specific amount ofmoney. If you want to make $100 worth of purchases during a particular billingperiod with your credit card, you need to pay $100 in advance using one of afew different methods. There are many advantages of pre-paid cards, one ofwhich is the fact that it is very difficult to make a late payment. If youdont have money on your account, you wont be able to use the card at all.Likewise, because people are less likely to abuse credit cards because thecredit limit is tied to a physical amount of money, pre-paid credit cards aregreat for repairing damaged credit or building new credit where none existed inthe past. Anyone can sign up for a pre-paid credit card so long as they havemoney to put towards the balance. Regular credit cards, on the other hand, areonly given to people who are considered to be safe borrowers with fair togood credit histories or above.
A store creditcard operates very similarly to a regular credit card, with the main differencebeing that it is only designed to be used in one location. If you sign up for acredit card with your local electronics retailer, for example, you cant usethat card to buy gas later in the week. You can only use the card for purchasesmade either in that specific store or through their online Web portal.
Balance transfercredit cards are designed specifically to allow users to take the balance froma high interest credit card and transfer it over to a card with more favorableterms and conditions.
Hotel or travelpoints cards are specifically designed to be used to book hotel and air fareaccommodations with certain businesses. One card may be branded with aparticular airline or hotel chain, for example. Oftentimes these types of cardsare targeted at frequent flyers and business professionals who are more likelyto earn cash back rewards and bonuses through these types of habits.
Gas credit cardshave become very popular in recent years, especially as the price of gas hassteadily risen all over the world. Certain gas cards will treat all gaspurchases equally, regardless of the retailer. If youre supposed to earn 100points for every dollar that you spend on gas, for example, you will earn thosepoints on any gas purchase at any retailer in the country. Other gas cards,however, are retailer specific. You may earn fewer points on gas purchases ifyou dont go to the same retailer that has branded the card. In certainsituations, you may not earn any points at all as the purchases are deemednon-qualified.
Secured credit cardsare another type of card that is designed for people with bad credit or nocredit. It operates very similarly in theory to a prepaid credit card. Themajor difference is that instead of paying money towards the balance of thecard in advance, you have to put something up for collateral to get approvedfor the credit card in the first place. Collateral can be anything of monetaryvalue like a home, a car or even jewelry or stocks. However, you always want tomake sure that you are prepared to pay off the balance and full and keep upwith the terms and conditions. If you dont, the lender can take whatever youused as collateral as payment for purchases that you mad