It’s been a long time since credit cards have been seen as anything other than an essential part of modern life. In fact, credit card companies are now offering incentives to get people to sign up for their credit cards! However, getting a credit card can be difficult and confusing. This article contains the most important things you need to know about credit cards before signing up.
Table of Contents
Know the credit card terminology
You have to be familiar with credit card terminology when getting a credit card. As someone who is planning to get one, you need to know the difference between the credit limit and credit line along with other terms that are commonly used in credit cards, such as revolving balance or cash advance fee.
- Credit Limit is the maximum amount of money one can spend on their credit card.
- Credit Line is the credit limit that you are allowed to use for your credit card.
- Revolving Balance/Balance Transfer refers to when there’s an amount left from one billing cycle, which then starts again in the next billing cycle until paid off.
- Cash Advance Fee is a fee charged by credit card issuers when cash is taken from the credit line.
- An annual fee is a fee that credit card companies charge per year for the service.
Understand your credit score and how it affects your ability to get a card
Your credit score is the determining factor when you apply for a credit card. If your score is too low, you may be asked to pay an annual fee or higher interest rate as compared to those who have high scores.
The best way in order to understand how it works and what’s important is by checking your credit report regularly from trusted sources such as AnnualCreditReport.com, which will help you monitor any impact on your score due to changes made with loans and cards that are reported within the last two years of time period or Transunion if reports were issued before 2003.
As long as you have good credit, the approval process will be faster and easier for you to get your card without spending much time filling out paperwork or going through unnecessary steps that waste both of your valuable time. Therefore, start checking your credit report from trusted sources at least once every year, which is required by law, so there’s no reason not to do it regularly.
Look for good credit card rates
You have to hunt for credit card rates because they come in different ones, and each one has its own purpose for credit card use. For example, if you like to travel a lot through plane tickets, then it would be best that you get a credit card with low-interest rates on purchases made outside of your hometown or country.
The same thing goes for people who do not make their purchases locally but prefer shopping online from international stores as they can also benefit from having an overseas transaction rate credit card. Whatever you choose, you should always try to find the lowest card rates so that you don’t become broke. The best way to do this is by searching around different rates and credit cards reviews so that you can get an idea of what the best credit card rates are.
Understand what happens if you make late payments or miss them altogether
There are serious consequences to making late credit card payments. If you are unable to make them, contact the credit card issuer immediately and let them know. Some credit card issuers have cuts-and-paste payment options, which give consumers the option to automatically pay their credit card bills every month.
When you miss a credit card payment or make it late (or just do not pay at all), your credit score will take a hit, and that can affect things like whether or not lenders approve of an auto loan for you in the future.
The creditor may report missed payments to credit bureaus as well. If this happens, then it is likely other creditors who check your credit history with these credit reporting agencies, such as mortgage companies and car dealerships – will see them too!
Be aware of annual fees, interest rates, and other charges that may impact your budget
You must know about credit card fees before you apply for one. Annual credit card charges are discussed in many credit cards’ terms and conditions, but some credit cards have hidden annual charges that can make your budget suffer.
An annual credit card fee is a set amount of money charged every year after the first 12 months since opening an account. If you are not aware of credit card annual charges, you may be charged with an over-limit fee or stop payment fee without knowing that an account renewal was due on your credit card bill.
There, now you know how to prepare for getting a credit card. Always look for the best rates and learn the terminology to know what you’re getting into. Make sure you know all the annual charges coming your way and don’t be late on your payments because you’ll suffer dire consequences. Before trying to get one, check your credit score on credible sources. Good luck and happy shopping!
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