How to Understand the Basics of a Credit Card

There is so much to know about credit cards, their offers, the interest rate and what happens when you are late with a payment. Their regulations are in such small print and you can't understand what they are trying to tell you so you just throw it away. Why bother as along as you can charge, make a payment now and then or on the due date and go on with your life.

It makes a big difference when the interest rate is too high, you over charge or your payments are late. All of this can hurt your credit so I am going to break a few things into simple terms. It's easy once you know what you are trying to look for and why.

A.P.R.

This is your annual percentage rate. It can be very high which takes a lot of your money away from the principle. When the rates is 20.99 % that is very high. It means for every $10.00 you spend they are going to add another almost $3.00 in interest. It adds up very fast when you need to make every penny count. Look for interest rates in the range of 9% if possible. This will all depend on what you qualify for according to your credit history and income.

When you get a charge card it will have the limit you can charge. Such as $5000.00 at the interest rate of 9%. This is fine, but what about cash advances. This is cash you can pull from your credit card. You must be very careful and know what you are getting when you do a cash advance. Most of the time your cash advance limit is lower than your charging limit and the a.p.r. is much higher. If your charge limit is $5000.00 at 9% you cash advance limit can be at $2500.00 at 21%. It just makes more sense to charge something than to take a cash advance.

Over Limit Fees.

Gone are the days when your card is turned down for being over your limit. Most companies will let the charge go through to protect you from embarrassment, but it cost you a huge fee. Your limit is $5000.00 and your charge $5003.00 you will get an over limit fee such as $40.00 on your next statement. For each time you make a charge over the limit it will be another $40.00. So Don't over charge just because you can. The fees will go against your credit and are expensive.

Late Fees.

If your payment is late you will get a late fee. It is as simple as that. Don't whine because it was only one day late. It is still late! You have options other than the regular mail. Today you can walk into the bank and make a payment on a bank card. You can go online and make a payment. You can mail the payment in plenty of time for it to post! Not just arrive, but it must go through the system of being posted too. You can make arrangements with your bank to pay it for you every month as soon as it is due. Late fees look bad on a credit report and too many fees will change your interest rate to a higher amount and it will take several months to establish a good payment history before it will be lowered.

Annual Fees.

Many credit cards have annual fees. Check carefully why there are fees and if there is a way to avoid the fee. Sometimes it is only a matter of charging something once during a one year period for the fee to be canceled. Sometimes the fee is because you have a special charge card with rewards for every dollar you charge. If you return something the point come off just like they went on so don't try to be slick. It's already been done and it doesn't work.

Balance Transfers.

Credit cards are always offering the lowest percentage if you will transfer your whole balance from another credit card to them. Sometimes they will even offer 0%! How can they make money like this? Well the offer is usually with a fee for the amount you transfer such as 3% right off the top. You will maintain the 0% for the life of the balance unless you are late with one or two payment or you have over limit fees! This is where the companies get you. You don't pay attention to the details so you make a few payments only one day late. The next statement arrives and you are shocked to see your special 0% has jumped to 28.99%! It's because of late payments or over limit fees. So be careful to make the payments on time and pay off the balance as soon as possible.

Your Rights.

You have the right to ask for a lower percentage rate. Sometimes the company will lower your rate if you are a good customer and have NO late payments or other fees. Don't pay in full every time. Let a few payments be the minimum payment so you can build a history and credit record. This helps for the company to offer you a lower interest rate when you ask for it.

You have the right to ask for late fees or over limit fees to be removed. Much of the time the fees will be reversed. This does not mean the late payment is forgotten. It is still a late payment, you just don't have to pay the fee.

You have the right to ask for your payment date to be changed. Payment cycle can be different when placed into another cycle. Your payment due date is based on the cycle you are in and how many days are in the month. SO your payment date can change by as much as 2 to 3 days in either direction. Watch for your due date each time you receive a new statement. It's not an excuse for a late payment because you didn't check to see if the due date was different from the last 3 times.

This is just a small amount of what you need to know about basic credit. Credit card companies offer different package and programs all the time. Change is constant and there is always a better deal somewhere. Watch for interest, learn why and how it can change and know the different ways your credit card will cost you. Credit is easy to manage if you just know what too look for and how to cont