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Jun
07

Credit Card: Frequently Asked Questions

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Credit Card:  Frequently Asked Questions

Knowing what your credit card does by knowing the frequently asked questions about the in’s and out’s of this credit card will help save a lot of money in the long run.  Let’s start with secured credit cards which are a credit card that a potential cardholder “secures” with a deposit to ensure future payment of the outstanding balance if the cardholder defaults on payment.

Secured credit cards are generally targeted to these potential customers with imperfect or limited credit histories who do not qualify for a traditional unsecured credit cards which by the way can be a great start to reestablishing or establishing a good line of credit.  An unsecured credit card is not guaranteed by the pledge of any collateral but the interest rate is generally higher.  Most credit cards are unsecured debt and, therefore, have higher interest rates than other forms of lending such as mortgages that hold property as collateral.

Can You Obtain An Unsecured Credit Card Easily?

The criteria for unsecured credit cards used to determine eligibility varies from credit card issuer to credit card issuer. So knowing this keep in mind that each credit card has it’s own set of rules and interest rates hikes that may potentially affect your repayments and the amount of stress you would be under if you do not pay attention to all of the terms and agreement writing.

Requirements To Obtain A Credit Card

Most banks and many financial institutions will grant you a credit card if you meet the following requirements:

  • You must be a resident of the United States.
  • You must be at least 18 years of age.
  • You must make at least $95 a week.
  • You must have a valid Social Security number.
  • You must be employed for at least 6 months.

Credit Cards Are Not Created Equally

Credit card terms and agreements vary among the issuers of these credit cards.  When shopping for a credit card, think about how you plan to use it.  Do you expect to pay your bills in full each month or do you plan to pay off your purchases over time?  Consider the annual fee, finance charges, interest computation method, whether or not there is a grace period for purchases and cash advances or balance transfers.  It is also a good idea to look at the credit limit, how widely the credit card is accepted, additional services and features(such as rewards programs), and the Annual Percentage Rate (APR) and finance charges.

NOTE: Most credit card plans (which can be found in the terms and agreement)  allow the credit card issuer to “reprice” your current APR if the credit card account falls into poor or bad standing or becomes delinquent in any way.  Repricing is the act of increasing the APR.

What Is An Annual Fee?

  • Some issuers charge an annual membership fee or participation fees. These range from $25 to as much as $100.
  • “Gold” or “Platinum” cards sometimes reach as much as several hundred dollars per year. These fees may be charged whether or not you use the credit card.

Are There Transaction Fees And Other Hidden Costs?

A credit card may include other hidden costs such as:

  • credit card issuers charge fees if you use the credit card to get a Cash Advances,
  • make a late payment, or
  • you exceed your Credit Limit.

Often a credit card issuer will charge a fee to transfer a balance from another creditor’s account to their account. These hidden fees are disclosed to you in your Terms and Conditions as well as in your Credit Card Account Agreement. It is important that you read this document very closely in order to understand your responsibilities as an account credit card holder which will help you in the long run.

What Is Credit Card Fraud?

One way to keep credit card fraud under control is to closely monitor your credit report.  A great way to do this is with a credit monitoring service.  The cost of this service can range from $20-$50 per year.  They give you unlimited free copies of your credit report so you can check it whenever you need to, online Monthly Monitoring Alerts to inform you of changes, black marks, inquiries and possible credit fraud signs on your credit report, this credit information to help you deal with inaccuracies in your credit report, a newsletter with tips for managing your good credit, and articles to help you stay on top of your credit.

Is It Safe To Use Credit Cards Online?

It is much safer to use your credit cards on the Internet with a secure server than calling someone and giving your credit card numbers over the phone. However, people are still somewhat leery about using their credit cards on the Internet. When you use a secure server over the Internet, the data gets scrambled or encrypted and then put back together again once it reaches its intended destination. If you give your credit card numbers over the phone it is not in cryptic form. Furthermore, most credit card companies guarantee safe shopping on the Internet so you really have nothing to lose.

These frequently asked questions pertaining to your credit card or a credit card that you are looking to obtain will help shed a little light on credit cards as a whole.  As stated before credit cards vary from card to card and should be used properly and financial restrain should be shown with regard to your spending habits.  Make sure you completely understand that terms and conditions for that particular credit card so that you know exactly what to expect.  If you have questions make sure to contact that credit card issuer immediately before committing to the terms of that credit card.

Credit Card: Frequently Asked Questions

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