Credit Cards

Sure they are convenient. Open your wallet, take out a bunch of credit cards, choose one, sign the slip, pick up the parcel and off you go. Nothing easier. You don’t even have to wait for the change. But this little bit of indulgence costs you and when your account arrives and you are staggered at the costs, you have forgotten that nice warm feeling of using your credit cards and all that’s left is the pain of paying. By then those nice blue jeans you bought with your credit cards are already looking crumpled and ragged.

It’s not easy to avoid the costs associated with credit cards but you can reduce them. First you must decide what the cards are going to be used for. Are you planning on splurging with your credit cards or are you just using it for little essentials that can't wait until payday? Do you want to transfer the balance from another card? Maybe you only want it as insurance in case of emergency expenses. The more uses you attach to the credit cards the higher the costs will be. So start by eliminating all the services you don’t need. You have already made inroads into cutting costs.

What is a Credit Card?

The name credit card was coined as it denotes the small card made of plastic that is used by the customers of credit card. Unlike debit cards, it does not allow the users to use the money from their own account but in contrast it lets the users to borrow money from the specific credit card company which could be repaid in form of interests or in other ways every month. The dimensions and shape of all credit cards would be the same as it is specified by ISO. There are numerous credit card companies in today’s market at customer’s disposal according to their needs.

History of Credit Cards

The history of credit cards dates back to 1920. It was used in United States in automobile business to sell fuel. However the idea was originally invented by author Bellamy. He has used this system in his novels “looking backward” and “equality”.

In the year 1938 number of firms started adopting the method of using credit cards for their transactions and purchases. This way the credit card system became quite popular.

During the early 90’s controversies have developed regarding usage of credit cards by youngsters soars their debt level.

Apart from all these issues because of its functionality and other features credit card system remains unaffected.

How does it Work?

The credit card service provider issues the user a card and each card has a particular cash limit till which the user can make purchases. By signing a receipt while making a purchase, the card holder gives his approval to pay back the service provider. These days a lot of merchants agree to continue business by means of verbal authorization, either through telephone or internet. This method is termed as no credit card present system.

Concept of Grace Periods

It is the time limit within which the card holder has to pay the balance to prevent interest being charged to the balance. For each company the grace period varies, it might also vary according to the type of credit card the customer possesses.

Advantages of Credit Card

The user does not have to carry a huge amount of cash every where he travels. Credit cards also come handy in case of emergencies. In today’s busy world where people have no time even to have their breakfast patiently, such systems are very useful as they keep in pace with technological innovations.

You have a number of choices. Once upon a time credit cards were issued by a few banks. Things have changed and credit cards are obtainable from many places. Thousands of companies and financial institutions supply credit cards so you should shop around to find the best deal for your needs. This is what you will find when you start looking:

Online
The quickest and cheapest way to get a credit card is online. You apply for the card online and the rates are usually lower. Online issuers usually have smooth online banking systems, although there may be less in the way of other support services.

Banks
This is the traditional place to get a credit card. All banks offer a wide variety of credit cards. The bank may not be the cheapest, but you are assured of good service support and you have the facility of talking face to face with a live human being. The bank is a good place to start.

Credit unions
If you are eligible or are a member of a credit union then you could get a great credit card deal. Credit unions are run by their members so the fees are less than those of banks and building societies. You may have to save money with a credit union before being eligible to borrow credit and it may be difficult to become a member of a credit union.

Supermarkets
The latest suppliers of credit cards are supermarkets. Supermarkets are branching out into all types of business including financial service products such as credit cards. You could get a good deal on a credit card at the supermarket which may also include discounts on items within the store. Other retail chains and stores are offering credit cards and the business is even spreading to sports clubs and general stores.

Building societies
Building societies are usually overlooked by customers looking for credit cards. They offer much the same level of service and options as the banks. When you are looking for a credit card, look at your local building societies as well as the banks in order to find a good deal. Try combining a credit card with a mortgage loan. This could save you money on both.

The range of credit cards suppliers is growing steadily. Shop around before making a decision.

Carrying a credit card is very convenient. It also provides a huge temptation. It’s so easy to walk in to a store, buy something on a whim, sign and walk out. It doesn’t even feel as though you are spending money! If you don’t have the funds in your account and you are taking a loan to make a purchase, you will find that it is the most expensive loan you will ever take.

For some people, shopping is an addiction just as alcohol, cigarettes and drugs are to others. A shopping addiction and credit card are a bad mixture. You can get your ‘fix’ anytime you want. But in the end, you have to pay off what you owe each month, because as long as you keep paying the minimum amount, you will never get out of debt.

You are in debt and you have very little to show for it - no car, no house, no new furniture, just stuff you keep picking up because you can’t resist the credit card offers. Your credit card company is happy because they are making money out of you, even when you don't pay off the balance every month. So as long as you continue to make those monthly payments you are going to continue to get credit card offers.

You have to learn about restraint, how to say ‘no’. No more self indulgence every time a credit card offer comes by. At some point you have to put an end to your spending.

Think before you give into that next credit card application form; consider what you will be paying off over the next ten or fifteen years. Consider whether those new clothes are worth living in debt forever, or whether it matters if you have the extra pair of shoes. Consider pulling in your reins and getting yourself into better financial shape as fast as you can.

Perhaps you need help when it comes to uncontrollable spending. If you can't say no to that next credit card offer, then you had better get a better job or find a rich partner that can pay your credit card debts for you. And whatever you do, make sure that you pay your bills promptly. Don’t let your credit score go down the tubes as well.