Since you are reading this site it is a good assumption that you want to know how to use credit cards responsibly and how credit cards can help build your credit. Credit cards are one of the most important financial instruments you might ever have. Credit cards can be the first step in building a great credit profile that will one day up with you getting approved for the mortgage on your dream home. Perhaps the most important action you can take on learning more about credit cards is that everything is cheaper with cash. The days of going down to the corner store and negotiating price and asking for a cash discount are long gone. The most responsible and in fact often the least expensive way to pay for an item is with a credit card. There are three basic groups of cards typically referred to as credit cards. The groups are:
Each card can be a great benefit to you. Each card when used responsibly will help you save money and build credit. Within each category, there are a variety of cards.
Retail Cards are typically for a store. Examples of retail cards include Macy’s, Gap, Nordstrom, JC Penneys and others. Retail cards can often be the first card someone may get in order to establish credit. The cards may also be branded with Visa or Mastercard which means not only can they be used at the retail store they can be used anywhere Visa or Mastercard are accepted. Retail cards may approve someone with no or limited credit but the credit line may also be small, just enough to make the purchases at the retail store. One of the biggest benefits of the retail card is the store will often grant the largest sales and discounts to cardholders. The ability to build credit, potentially make purchases wherever Visa and Mastercard are accepted and receive great store discounts and rewards make retail cards a must have for anyone looking to establish or grow a sound credit history.
Charge cards aren't as common today as they once were. Options are fairly limited, but they do exist. These cards do not grant you credit but rather are spending tools and when your statement with a balance is issued at the end of the cycle the full balances is due in full. Charge cards since they do not offer credit tend to offer great benefits. Depending on the company there might be ancillary benefits associated with the company that issues the charge card such as excellent customer service. If you pay off your credit card balance in full each month, desire great rewards, and desire excellent benefits a charge card is the correct card for you. See: Cities With the Most Female Entrepreneurs
Credit cards are the most common financial instrument and have become essential for everyday life. When used properly credit cards can help you save money, manage your budget, and earn great rewards. Credit cards are issued by large multinational banks, regional banks, credit unions and other major credit card issuers. Even within the credit card category there are many types of cards, examples include:
First, let's discuss the claim that credit cards can save money. Most people might claim the opposite. It is absolutely true credit cards can save you money. A new credit card will often be offered with a 0% interest rate, you can keep your money in savings while paying no interest on your card, thereby saving you money. Credit card companies often team up with merchants to offer great discounts. This is in addition to any discount you may receive from the merchant. Credit cards often earn rewards and the reward or cash back received is savings to you. Credit cards can help you manage your budget. I am sure that everyone has had the experience, you go to the ATM, you take out $100, and then a few days later you wonder where that money went. How much better is it to keep track of your spending, which you can do through the banking app, and then at the end of the month send in one payment. If you are short between paychecks you can spend on the card and pay when you get the statement. If after reviewing your spending, you can decide you have additional money left this month or you can cut down. Credit cards can be an amazing budget management tool. Rewards were mentioned as a way to save money. However, even more importantly, let your credit card pay for your next vacation. Point reward cards typically have travel portals where you can pay for flights and hotels with points. Cobranded rewards cards such as Citi Aadvantage and Chase Hyatt allow you to earn the airline and hotel reward miles and points thereby getting free flights and hotel rooms. Lastly, each type of card has its own story. Please look at our informative review of cards to pick your best option. More From Seek
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