Credit Cards Facts

There are many different types of credit cards available today, and trying to decide which kind is right for you can be a bit of a challenge! Luckily, they are fairly straightforward for the most part, and your biggest decision has to do with what you value most. You simply have to investigate the credit cards facts of each, to narrow down your choices. So, to help you shift through your possible options, let’s take a look at each one in more detail below.

Standard Credit Cards.
The first category of credit cards is termed standard or general, and these live up to their name. They are typically no frills options, which have no extras or bonus programs associated with them. Also, you won’t need to provide any security, and the credit will be extended to you based upon your worthiness. This is calculated using a complex formula that factors in your past credit history, if you have a track record of paying on time, and perhaps your other funds too.

When it comes to credit cards facts in this category, it is important for you to take note of the two most common ones available today. First, you’ve likely heard of balance transfers, where you can take the amount owed on one card and move it to another. Why would you go through the hassle of doing so? Typically, you’ll be offered a very attractive initial interest rate, and 0 percent interest isn’t uncommon. Just be sure to read the fine print, as often this goes up sharply after the first six months or a year. Also, there is usually a transfer fee, which is often a percentage of the balance you transfer over. So, for example, if you moved $1,000 and the fee was 3 percent, then you’d have to pay $30 for the transaction.

The pros of balance transfer cards are the ability to stop paying interest on a large debt, which can be worth the extra work. This is especially true if you’ve accumulated a huge balance on one card alone, as accruing no interest can allow you to pay down the balance faster. However, the downside is the limited period of this low interest rate, and the fees which you’ll have to pay to move your balance.
The second common type of standard credit card, is one with no or a low introductory interest rate. How is this different from a balance transfer option? Rather than moving a pre-existing balance, you’ll be starting off from scratch instead, and again the rate will move up after the grace period expires. However, these cards can be helpful if you are planning to buy a big ticket item, and pay it off before the initial time frame is up.

Cashback Cards.
Cards that have a cashback reward or bonus program are highly popular today, and you’ve likely seen ads for these many times before. The idea behind them is simple – the more money you spend on your card, the more money you’ll receive in the form of a credit. As people love to get free things, these types of products are in demand, and you probably are interested in learning more about them yourself!

Yet, it is best to take a few minutes to familiarize yourself with the credit cards facts associated with this option. This will allow you to pick the reward program which best fits your lifestyle, purchase habits and needs. Therefore, let’s examine a few of the most common of these cards on the market right now.
First, gas cards are enticing if you travel often, or you simply want to save money at the pump. This is becoming more and more attractive, as the price of gas continues to rise! How do they work? Typically you’ll be awarded a certain percent on each purchase of fuel, which will accrue in your account.

Second on the list of reward cards, are ones which give you cash back for anything that you buy. These operate in the same general way as gas cards do, but you’ll get a percentage back on a number of different types of purchases. Again, fuel is often the most rewarded item, and groceries are another popular category as well. A common example would be getting 3 percent back on gas, 2 percent on groceries, and 1 percent on all general purchases.

How do you receive your rewards? Cashback cards use dollars directly, and you can access this money in a few different ways. You can either have a check mailed to you, or have your outstanding balance lowered instead. If your balance is currently zero, then you’ll simply be issued a credit. Because of the several payment options, and the fact that you’ll be given cash (not points), cashback cards are far simpler to use. They have no downside, as qualifying for them isn’t harder than other cards, and the reward programs are free. The only caveat to this is the annual fee, and certain cards have a prohibitively high yearly cost. Just be sure to check this item before signing up, as there are plenty of options which have no fee at all.

Reward Points Cards.
Next we need to examine the credit cards facts concerning points programs, and these can be very confusing. Rather than being given a flat percentage on each category of goods that you purchase, you’ll be issued points instead. The amount you’ll receive will depend upon what items you buy, and the rules of your particular card. There are programs which emphasize specific purchases, such as rental cars, hotels, airline tickets or even electronics. Often times these cards are brand or chain specific, and they’ll only give you points if you use one particular merchant. For example, you can find cards which will reward you for purchases at Best Buy or American Airlines, but you’ll need to buy your goods at only these companies to receive your bonus.

The pros of reward points credit cards, is the free items which you’ll eventually earn. This might be worthwhile if you use the category of item frequently, like buying plane tickets for business travel. That being said, it takes a massive amount of points to earn anything valuable, and the point system is often confusing. To further add to the downside, your points may expire after a certain amount of time has passed. Therefore, for all of the above reasons, this type of card isn’t recommended – especially if you are new to owning a credit card!

High Risk Cards.
If you have bad credit, then obtaining a credit card can be a challenge. Maybe you’ve simply made late payments, gone into arrears or perhaps you even have a bankruptcy upon your record. No matter what the reason, your only option may be to sign up for a high risk credit card. Yet, before doing so, you should find out the credit cards facts about this type of product.

Expect to provide security, as the company doesn’t extend you the same level of trust, which you’d receive if you had a good credit score. You’ll be asked for collateral, and this can come from several different sources. Obviously, money is the most traditional form, but the card company may accept your car, jewelry or stocks which you own as well.
As for cons, high risk cards typically have a low spending limit. They may also have extra costs when compared to traditional options, like an application fee. However, they can help you place your credit history on stable footing once again, if you pay your bill on time every month. Over time, this can raise your overall score, so it may be worth the extra hassle and expense to obtain this benefit.

Conclusion.
You now know the different types of products which are available to you, and the credit cards facts of each one. This knowledge will enable you to make an informed choice, about which card is right for your needs. Maybe you’d like to lower the interest that you are paying, by transferring your balance. Or, perhaps you’d like to take advantage of free cashback offers instead, and get paid to shop for things which you already buy! You may feel that a point rewards card is best for your situation, especially if you travel often. Finally, you may have a rocky credit history, and you’d like a high risk card to get you back on track.

Whatever your individual needs, you now have the credit cards facts in hand to make the right choice. Simply take your time, and weigh the options, and you’ll end up with a card that will live up to your expectations!