Debt Free Destiny

Credit cards have become a convenient part of everday life.

Although I strongly recommend using them with restraint, respopnsibility and common sense, they are most certainly the easiest, fastest and most secure way to make purchases.

For small businesses, it’s virtually impossible to conduct business without one. Most businesses use online accounts to order office supplies and a credit card is essential in that process.

Other benefits that credit cards possess, that no other from of payment can match:

1. help you establish a credit history for larger credit purchases later, like a mortgage or a car
2. act as a security barrier when purchasing online
3. give you an interest-free 30 day loan
4. they can give you bonuses for purchases, like cash back or travel points
5. provide extra insurance and warranties on items purchased
6. they can serve as a temporary emergency fund

Lets Start with the Basics - What’s a Credit Card?

A credit card is a piece of plastic that contains your credit account information and allows you to make a purchase without having to lay out cash. With a credit card, you can buy items at most any store and shop online.

You are able to order what you want or need up to your credit limit, just by giving your credit card number and signing the receipt.

The credit card company then pays for the purchases and in turn you are billed for the purchase and if you pay late, you’ll owe interest. It is important that you understand that having a credit card does not mean that you can go on a spending binge, you will still need to pay the bill at the end of the month.

Advantages of Credit Cards

One of the biggest advantages of having a credit card is convenience. You can shop for almost anything on the internet from the comfort of your own home.

Another big advantage is that you will not have to pay for any of your purchases for the first thirty days, and you are allowed a grace period. This is a period of time that you have to pay and not be charged interest. This advantage is very enticing for many people.

Using a credit card also provides some security in that if someone steals your card number and uses it without your knowledge, you’re not liable for the charges.

It’s super important to understand that you will have to pay the credit card bill when it is due. If you don’t, you could seriously damage your credit rating and jeopardize any chance of getting more credit cards.

Disadvantages of Credit Cards

Perhaps the greatest disadvantage to having a credit card is that if you do not pay the balance off completely each month, you will be charged an specific amount of interest charges according to the interest rate on your card. This happens often because many people do not realize what they spend each month until the bill comes in.

Each credit card company has its own interest rates. It is important that you know the terms and conditions of each credit card that you own. If you miss a payment, or are late by as little as 1 day, the interest rate will climb to a rate where it cannot be managed. For this reason, it is important that you pay your balance in full every month.

Requirement of Credit Cards

Credit card companies have very strict requirements in order to be approved. Every day, millions of people receive credit card approval in the mail. However it is important to remember that it is not as easy as that.

When you get that piece of mail, you are pre-approved to apply for a credit card, not for the card itself. You still need to go through the process. Your credit score and payment history will be scrutinized so that the credit card companies are assured that you will make your payments on time.

It’s easy to apply for a credit card with a good interest rate. Discover Card has great rates and cards for students as well.

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