If you have never been using a credit card and have made a decision to get one recently, you might not be aware of the crucial parameters of cards which should be considered before you decide to get one. This information is available in this article and you should read it be fore rushing to the nearest bank for a credit card.
What is a credit card?
First of all, you should understand what a credit card is.
Credit cards are not the same as debit cards which are a standard form of card offered to people when they open a bank account. With a credit card, you will be able to pay for your purchases and cards even when there are no finances on your card. This is working as a loan which is made automatically with your card. At the same time, there is a particular period within which you will have to return money.
Crucial criterion for choosing a credit card
For a person who is just starting to use a credit card, the previous information might be the only knowledge on the topic. Yet, there are several crucial differences between credit cards offered by different banks. In addition to it, the parameters of two different credit cards offered by the same bank can differ significantly.
Here are important parameters of credit cards.
Grace period is a special period within you will not have to pay any interest rates to the bank. Yet, it is important to understand the grace period is usually available only to the clients who makes minimum required payments every month. There will be more information on these minimum payments later in the article.
What you should remember right now is the fact it is a way more profitable to pay the entire amount of loaned money at a time rather than divide it into several smaller payments.
As you can imagine, a credit limit is the maximum sum available to the users of a credit card for borrowing from the bank.
The costs of using cash
Although there are some bank accounts which will allow you to use the money from your account in cash for free, the majority of them require a special payment for this service. Certainly, you should consider how large it is first.
Cashback is a frequent service offered to the users of credit cards. This means they will return you a particular percentage of the money you have spent with your credit card.
If a credit card user fails to return borrowed money within a grace period, he or she will have to pay interest rate. This value can differ a lot from one bank to another.
The costs of maintenance
Banks usually require a particular amount of money for the service of using a bank card in general, whether it is a debit one or a credit one.
Other useful parameters to consider
There are two other important parameters to remember about when you are planning to get a cr4edit card.
The bank reputation
Certainly, the reputation of a bank is extremely important as no alluring offers make any sense if the bank is not trustworthy. This information can be checked on various rating lists. It is better to check several of them and compare the information.
The amount of information about the card available online
As you will see in the next part of the article, all of the parameters of a credit card can be modified by a bank depending on your financial condition. So, you should prepared the offer in your case might differ from the official one and it is normal. Yet, it is good to be aware of as much as you can to expect since application for a credit card in some banks can turn into a tedious loop of endless calls form the bank with a view to discussing this issue.
What else should you know before choosing a credit card?
Even though a bank will tell you exact values for each of the parameters mentioned in this article, you should be aware of the fact in practice they can differ a lot since the conditions of using a credit card also depend on the bank client just in the way it is with any other bank credit. Some of the criterion a bank is going to use in order to decide whether to give you a credit card or not and which conditions of using it will be available exactly in your case, are the amount of income, your credit history and many other.