The ezPalm Blog

While some might think that credit cards are troublesome, there are actually more benefits than disadvantages to having a credit card.

Building that credit rating

When it comes to getting low interest loans and getting financed for other bigger purchases, your credit rating is one of the first things that lenders look at. They want to know if you can handle your money in a responsible manner. By having a credit card, charging items to it, and then paying it off, you get the chance to show that you can handle your finances.

You don’t have to carry cash

A credit card is much safer to carry around than cash. Even if your credit card should get stolen, you can report the loss and not be held accountable for the unauthorized purchases. When cash is lost, it’s usually gone for good.

Things you might not know

Credit cards also offer free insurance on items that have been purchased, allowing you to return items that do not meet your expectations or cancel transactions that weren’t authorized.

Credit helps in an emergency

One of the main uses of credit cards is to supply extra funds in an emergency. Many cards offer car insurance and roadside assistance as well as cash advances and checks that can be written from the limit of the credit card. If you have a bill that’s larger than you expected, credit cards can help to pay it off until you gather the money that you need.

Online shopping

Shopping on the Internet is safer and easier when you use a credit card instead of a check or money order. Almost all online retailers take credit cards over a secure link, allowing transactions to be completed instantly rather than having to wait for checks to clear.

Widely used

Nearly every retailer takes credit cards as well as restaurants, hotels, airlines, car rentals, and gas stations. You are covered with a form of payment wherever you go and whatever you do.

Rewards

And of course, credit cards also like to thank their customers for using them with rewards like cash back or airline miles. You can also receive discounts on future purchases or gas rebates.

With punctual payments and low balances, you can increase your spending limit as well to give you even more flexibility with larger purchases. Instead of having to start a book of payments, you can charge the item and possibly reduce the amount of interest that may have had to pay with the retailer.

Beth Derkowitz recommends Find Credit Cards for finding an Advanta business credit card for your small business. See http://www.findcreditcards.org/issuer/advanta.php for more information.

When you get a credit card offer in the mail that says you are pre-approved, what is the first thing you look at on the letter? The interest rate, right? And when you get an offer from a credit card company after filling out an application either through the mail or online, what is the first thing you want to know? The interest rate. This rate determines how much money you will have to pay for past due balances each month. It can make the difference between paying a few dollars and a few hundred dollars every year.

So how do credit card companies determine which rate you get? And why is it different for different people? Well, the simple answer to the last question is that the better your credit is, the better rate you get. But we’ll look at that again in a minute.

First, each credit card company that offers a variable interest rate credit card uses a base interest rate to start with. This base rate is usually the prime rate, which is the rate charged by major banks to their most creditworthy customers. The Federal Reserve Board sets this rate and it can up or down depending on the economy. A slow economy means a lower rate; a flourishing economy means a higher rate.

So if you apply for a credit card, the company will check your credit score. This score is determined by many factors, including your payment history, you available credit, and the amount of your debt. If you have a high credit score, meaning a good history, the credit card company will add on a lower percentage rate, or margin rate, to the prime rate to determine the interest you pay on your card. If you have a low credit score due to bankruptcy or other poor credit history, the credit card company will add on a higher margin rate to the prime rate.

For example, if your credit is good, the company may take the prime rate of five percent and add on their margin rate for good credit at three percent. This means you pay eight percent interest on your new card. Your interest rate will change anytime the Federal Reserve changes the prime rate.

Rebecca Spitzer recommends Find Credit Cards for comparing 0 APR credit cards. See www.findcreditcards.org/type/0-apr.php for more information.