Things You Should Know About Credit Cards - Kredittkort Test

When you are young and get your first credit card application in the mail, you probably get very excited. There are so many things that you could buy with a credit card. You can finally buy that thing that you have really wanted but didn’t have the money for.

Credit cards can be exciting, but they can be dangerous, as well. You can end up paying thousands of dollars if you are not careful. You could also end up ruining your credit forever if you are not careful.

There are many places where you can get a card offer. You can go to https://www.kredittkortinfo.no to see what they have to offer you. They may have the perfect card for you and your needs.

This article will help you to learn more about cards and how they work. You can learn the dos and don’ts of using one. You can also do more research to find the information you need.

Things You Should Know

1. Not a Debit Card – When you use a debit card, the money that you spend comes directly from your checking account. It comes from money that you already have. It’s similar to writing a check, but it is much faster.

A card is an open-ended loan that you must pay back. When you use a credit card, the lender pays for your purchase. At the end of the billing cycle, you get a statement of all the purchases that you made. That’s when you need to pay at least the minimum amount due.

2. Credit Limits – Credit cards come with limits. You get a limit when the company goes through the underwriting process. Through this process, the company will see how much they think you can pay them back.

You don’t want to ever reach your limit. This can hurt your credit score because you are not meeting your credit utilization. If you max out your card, you will have higher fees that you must pay.

3. Credit Score – Your score is part of the numbers that lenders pull when they decide if they can give you a card. These are based on your report, which is a report of all the debt that you have ever had. They are provided by the three major card bureaus.

Payment history isn’t the only thing that is in the report. Your utilization is also thirty percent of it. This is the amount of money that you have borrowed compared to what you have available.

4. Interest and Fees – These companies make money by charging fees and interest on the money that you borrow. A card acts very much like a loan, so the lender needs to make money from it. This is how they do it, interest and fees.

The biggest thing that you should know about is the APR, or annual percentage rate. This is what shows the cost that you pay to carry a balance. This can be as much as thirty six percent of your balance. For example, if you borrow one hundred dollars and your APR is twenty percent, you will pay twenty dollars in interest fees.

5. Grace Period – Companies allow you a grace period where you don’t have to pay interest fees. Learn more about grace periods here. If you pay within that amount of time, you can save on those fees. The grace period is usually the time between the end of the billing cycle and the day that your bill is due.

A company doesn’t have to provide a grace period, but most will. They want your business and that is worth giving you a little time. There are enough people who won’t pay within that time that the lender will still make their money.

6. Finance Charges – This is another name for interest fees and can be calculated in different ways. The most common method is that your average daily balance will be used to determine how much interest you owe. This can change depending on your balance.

If you aren’t sure about how your finance charges are made, look into your card member agreement that you signed before you got your card. You should have read this before you signed it so that you have this information. There should be a section that says, “How We Calculate Interest.”

7. Variable Interest Rates – There are two types of interest rates that you can pay – fixed rates or variable rates. Fixed rates stay the same throughout the lifetime of your loan, while variable rates will change. Credit cards usually have variable rates.

The company doesn’t need to tell you if your interest rate is changing. This index is determined by the Federal Reserve. If the Federal Reserve raises its rates, your rates will rise, as well.

8. Minimum Payments – Your minimum payment is usually set by the company based on a percentage of your balance. This can be as low as one percent. Some companies will also add finance charges for the billing cycle to determine your minimum amount.

Your minimum amount is a small amount of your total balance. If you only pay the minimum amount, you will take a really long time to pay your balance in full. This will cost you more in interest and other fees.

9. Late Fees – If you miss a payment or don’t make it before the due date, you will be assessed a late fee. This can be as much as forty dollars depending on how often you have been late. This fee can be avoided if you just make your payments on time.

If you have just missed one payment, your lender may waive your late fee. That’s another reason that you want to make your payments on time. Your lender will give you a little more leeway on things like that.

10. Fraud – If you have a credit card, you have more protection against fraud than when you are using your debit card. If someone steals your credit card, you are only liable for fifty dollars according to the Fair Credit Billing Aid. You won’t be liable for anything more than that, even if your card is used for thousands of dollars of merchandise.

The Electronic Funds Transfer Act states that you can be liable for much more than that if you have your debit card stolen. If you don’t report it as stolen right away, you can lose money up to the amount that was used on your card. If you report it as stolen soon, you could only be liable for fifty dollars.

Conclusion

            This is just a short list of things that you should know about cards before you get one. You don’t want to get one without knowing the basics of them. You could get into real trouble if you don’t treat them with the respect that they deserve.

            You could lose money if you don’t use them correctly. Interest rates and other fees can cost you more than you expect, and you can be charged late fees up to forty dollars if you are late with your payments. Everything about your history with your card will also go to your report, so you want to make sure that you pay on time.

(Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)