Nowadays, there is a credit card for just about everybody.
However, when you are ready to look for a trustworthy credit card, you should not only know how they work, but you must also be patient and willing to research different cards before deciding which one you want.
There are three main categories of people when it comes to credit: those with bad (or nonexistent) credit, those with mediocre credit and those with good credit.
Most students usually fall under the first or second categories, simply because they have not had to finance themselves, or they have not had the chance to prove their financial trustworthiness.
As a result, you must start with an unsecured credit card, which is the most basic type.
Although these cards do not have the best rewards or programs, it is the only way to start.
As long as you make your payments on time and show your responsibility, you will improve your credit score substantially.
In turn, you will be able to apply for better credit cards as you move on to the next parts of your life.
When advertising credit cards, businesses will often show customers enticing statistics that make offers look more appealing. It is crucial not to judge the companies based on what they say; rather, you must look at the fine print to fully understand what you are signing up for.
First, you must understand the different terms that appear within the fine print of each offer, such as annual percentage rate (APR). APR is basically the rate used to find the interest you pay for using the credit card company’s money.
There are different APRs for different transactions: purchasing, balance transfers and cash advances.
The purchasing APR is the interest rate that applies to day-to-day purchases.
The balance transfer APR applies to the transfer of money (or credit) from one account to another.
The cash advance APR applies to withdrawing cash by borrowing it from the credit card company.
When making any transactions, this rate becomes extremely important.
For example, if you borrow $1000 from somebody, they would usually ask you for $1000 back at a future date.
However, a credit card company will charge you for using their money; this amount is based on your APR.
Each time you pay them a portion of this $1000, they will make you pay a percentage of this for their services.
The more and more you pay of this debt off, the less interest you will have to pay each month.
Additionally, there are fees in these contracts with credit card companies.
If you make a late payment, the lender can charge you.
They will also record this and make sure it is part of credit history.
Some credit cards also have annual fees, which are yearly fees paid for using a lender.
So, if there is a lesson in this, it is to borrow money only if you can make the monthly payments.
