Thursday, 16 June 2016

A Beginner's Guide to Credit Cards

Credit cards can often be given a lot of bad press. But they can actually be a useful tool in your life. You just need to be sensible about it and choose the right one for you. You need to be able to budget as well. Otherwise, that is when it can be a negative in your life. If you only spend what you have, you will be fine. It is important to monitor your spending alongside with your income.

Having a credit card can help to boost your credit rating. Again, this is only if it is used in the right way. If you don’t pay off your bill, then it will lead to a bad credit rating. Having a good credit rating can help in many ways. It can help with getting a mortgage and other loans. It can affect the level of interest that you will be offered to you too. Even something like getting a new mobile phone contract will look at your credit rating. If you try to apply for a credit card and get declined, then it does affect your rating. So one of the best things to do is to get a free credit check and credit report online. Then you can see what the likelihood of being accepted is. But if you ar looking into getting a credit card, there are some things that you should consider.

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First of all, you need to understand what a credit card is. It is almost like a short term loan as you won’t take funds out of your current account. Then you will just pay off the ‘loan’ after about thirty days. You don’t get interest on the amount you have spent if you pay it off straightaway. So that is where budgeting right comes in. If not, you’ll add interest on the daily balance.

It isn’t all doom and gloom, though. Having a credit card can offer lots of incentives and discounts too. They might offer great rates when you are abroad, so can be safer than having lots of foreign currency with you. There is more purchase protection when you buy something with a credit card. So if things get lost in transit or stolen, there is more protection. There is protection if you buy online with a credit card too. So though it will be a hassle if an item doesn’t turn up it will be a lot less stressful. Some cards even offer cash back on purchases or buying from certain places. Air miles are also a great thing to collect with credit cards.

So the bottom line is to do your research on the types of card available and the interest rates that are around. A credit card is a safer option than getting something like a payday loan. But as always the message is, if you can’t afford it, then don’t buy it. A credit card should be used when you know you can pay it off but might not have the cash immediately.

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