Credit Card Basics

CreditCardAssist.com has provided a comprehensive source of information that can help you outline many of the credit card basics, can help you determine if you are, in fact, ready for a credit card, will show you what type of card to look for when selecting from various credit card offers and can also help to outline how to use it responsibly.

Credit card companies are in the business of making money. Obviously, they do not offer loans and lines of credit to consumers out of the goodness of their heart. They expect you to use their cards and to keep balances on them over a period of time, thereby providing them cash in the form of finance charges. Luckily, it is possible to outsmart the credit card companies at their own game by taking advantage of the best credit card offers, such as cash back rewards and balance transfer options.

Credit card companies are in the business of luring customers in to applying for their cards. Common hooks include low interest offers and promises of instant approval. While there is nothing inherently wrong with these easy and cheap credit cards, consumers need to weigh their options carefully. For example, those cardholders that spend regularly on their credit card but are unable to pay the debt off each month should choose a credit card with a low interest rate. It is best to look through the many options available to find the one with the lowest APR for purchases. At the same time, the cautious consumer sets a goal for when the balance will ultimately be paid in full in order to avoid becoming overrun by debt.

Credit card companies are counting on consumers to use only their card to make all of their purchases. Consumers that dedicate all of their purchases to just one card can be making a mistake - while making the credit card company very happy. For example, when a consumer uses a balance transfer card to make purchases, they are playing right into the credit card company's hand. When the consumer pays back these loans, the payments are purposely directed by the credit card company toward the interest-free or low interest loans. In this way, the high-interest loan remains on the card longer - building additional finance charges the entire time. Therefore, a consumer utilizing a balance transfer card should use it for just that - balance transfers, and nothing else.

The same concept is true with low-interest cards. A card with a special low interest rate on purchases should be used when making purchases. Similarly, a card with a 0.00% APR can actually be used to make money for the consumer. Consider this: what if a consumer withdrew all of the money from his or her credit card with a 0.00% APR introductory offer and placed the money in the bank? While in the bank, that money collects interest. When it comes time to pay off the balance (which is when the introductory period ends), the necessary money can be sent to pay off the credit card and the rest of the money can be kept as profit.

Choosing the right card for the right purpose will ensure more money is saved. And, if executed properly, can even make money for the credit cardholder.

Credit cards are vying for consumers to use their card. After all, the more people out their spending money on their cards, the more finance charges they collect. In order to persuade new customers to switch to their card, many offer special introductory balance transfer offers. There hope is that consumers will transfer their balances and get rid of the old card altogether.

Smart consumers can take advantage of this battle. Those carrying balances on other credit cards can transfer their balances to those with special introductory APRs on balance transfers. Ideally, the balance transfer card should not charge fees for balance transfers. In addition, the longer the balance transfer lasts, the better the card. By transferring balances from cards with higher interest rates to those with 0.00% interest rates, the consumer is essentially making the new credit card company pay off the debt owned to the other card. Once again, this balance transfer card should never be used for purchases, unless the introductory rate also applies to purchases.

For those that do pay their entire balance in full at the end of each billing cycle, it is important to look at the other features offered by the credit cards. Many offer special rewards programs, which include access to gift certificates to restaurants, theaters, and retailers. Yet others offer free or reduced travel, with many working in conjunction with airline miles rewards. Still others provide cold, hard cash rewards to cardholders.

Rewards credit cards tend to have higher interest rates than those without a special program. Therefore, the smart consumer will only use these cards if he or she can pay the balance in full each month. In this case, the consumer can make money off his or her credit card.

It is best for consumers to stick with only major credit cards rather than store cards. Store cards offer attractive instant approval programs, making it tempting for consumers to apply for a card and spend, spend, spend at the store - all on the same day. This type of impulse spending is exactly what the stores are hoping for. To make it even worse, store credit cards have higher interest rates than major credit cards. The only time these cards should be used is when they offer special discounts at the store when applying for the card and the consumer had already planned to make a large purchase there. The balance needs to then be paid off immediately in order to avoid high finance charges. Once again, this forces the credit card to work for the consumer rather than the consumer working to pay off large debts.