Understand Your Finances. What are Credit Cards?
A credit card is a facility that allows you to borrow money from your bank or financial institution and lets you make purchases. It’s a plastic token with a magnetic stripe that holds a machine-readable code. These facilities charge interest and are primarily used for short-term financing.
Borrowing limits on credit cards are pre-set according to an individual’s credit rating.
Credit cards also generally have higher interest rates than other lines of credit. It’s always advisable to apply for credit cards if you need them and plan on using them wisely.
You should only fill out an application for a credit card that meets your needs.
Widely accepted across the world as a form of payment, credit cards provide convenience. They have become one of the most popular forms of payment for consumer goods and are a convenient substitute for cash.
Credit cardholders must pay for credit card purchases within 30 days of purchase to avoid interest or penalties. A possible way to improve your credit record is by paying more than the minimum monthly balance on your credit card.
It’s also a good idea to pay down the credit card that’s closest to its limit first. By paying down your balances you could improve your credit score in the long run.
Your credit utilization should ideally be low- this demonstrates that you can use credit responsibly.
What benefits are offered by credit cards?
You can use your credit card to make a large purchase now and pay it off later in smaller chunks.
Having access to a credit card can be a good way of building up your credit score.
If you pay your credit card balance in full you won’t be charged interest.
Having credit cards can be useful in cases of emergency and they can be helpful for when you want to transfer balances.