There are many different reasons why people get credit cards.
Some people have gotten credit cards and used them just for the customer rewards. Credit card companies are known for having great programmes for helping their customers. Some people get credit cards with product protection, which means that if something goes wrong with an item they bought with their credit card, the company will pay them back. Some people get credit cards so that they can shop online. Some people carry credit cards just in case they need them. Some people find that credit cards are a simple way to build up their credit history. Others have credit cards so they don't have to carry cash. If they lose their credit card, they can get a new one, but cash is gone for good.
No matter why someone thinks they need a credit card, they should think about a few things before they apply.
The first thing to think about is whether or not you'll be able to pay the bill when it comes. Most of the time, people get into credit card debt because they don't pay attention to how much they are spending. When the bill comes, they don't have enough money to pay it in full. The interest rates and fees on the bill go up the longer any part of the bill is not paid. It turns into a never-ending cycle that the cardholder can't get out of. If you think you might be the kind of person who would end up in this situation, you probably shouldn't apply for a credit card.
Find out the company's annual percentage rate before you apply for a card. The interest rate that each company charges is different. Don't be tricked by a company that says it has a loan with no interest. Many credit card companies do offer a 0% interest rate, but this is usually only for the first few months. After that, interest is added to the monthly bill.
The other thing you should find out about a credit card's interest rate is what kind it is. Some credit cards have fixed rates, which means that the interest rate stays the same no matter what. Other companies prefer a variable rate, in which the interest rate added to your bill will change based on how the economy is doing.
Be aware of how your credit card company tells you when your balance goes up or down. Some companies send their clients emails and text messages with the new daily balance and maybe a short list of any transactions that happened during the day. Other companies would rather send a simple bill every month. When you get these statements, look them over carefully and take care of any problems right away.
Check to see if there is an annual fee for a card. This is an annual fee that many cards charge to cover costs. If a credit card advertises that there is no annual fee, make sure this isn't just for the first year. As part of their introductory offer, many companies don't charge an annual fee at first, but they do after the first year.
Check out the company's programme to stop fraud. Have they done anything to make sure that your identity stays yours and doesn't get into the wrong hands? What will they do if someone steals your card?
If you're not sure if you can use a credit card responsibly, you might want to get a secure credit card. These are cards where you have to put money down first. This amount is then added to the card's balance.
If you use the right credit card in a responsible way, it will give you a lot of financial freedom.
