Few things are as crucial to personal finance as a credit rating. One of the simplest ways to improve your credit score is by using a credit card responsibly. Regular use and timely payments can help you build a strong credit history, which is essential for future financial opportunities.
But while many people will look upon credit cards as something that make life more convenient, or are just for bills, the savvy person knows… credit cards can actually make you money! If you look around there are many deals out there that will get you a credit card and actually reward you to do it! Just two examples of this are
- With the American Express Blue Cash Preferred card you can earn $350* Cash Back on initial purchases, and then continue to earn cash back over the life of the card!
- The Chase Freedom Unlimited card offers another cashback card that can earn you an extra $300** worth of cash back.
Credits cards are not just designed to make your life easier anymore, for the smart buyer, they can actually be engines that generate you extra money in your pocket.
Most of the time however, a credit card is a simple way to pay for purchases easily. This is especially true when it comes to online shopping. Everyone loves to shop online, but it gets really difficult if you don’t have a credit card to do so. This article is going to look at several aspects of credit cards and hopes to inform people so they are always using them correctly.
Credit Cards and Credit Rating
One of the reasons it’s important to get a credit card is to start to build a credit history. Having a long standing responsible credit history is important for anyone as they grow. This will be taken into account when a person looks into potential loans for cars, but especially for a mortgage.
However, another aspect of a credit rating comes from the percentage of credit that is available. If a person is consistently near their credit limit on their credit card and only paying the minimum payment, this can be a red flag to a potential loan officer. It shows that maybe the person isn’t ready for a large scale loan with all of their items.
Paying for a Credit Card
There’s two ways that a consumer is going to pay for their credit card. All that access and usefulness isn’t free afterall. The first is through a yearly fee to own the card. Not every card charges a yearly fee, and some often remove the cost if the credit card if linked to a bank account or is otherwise waived.
The other way that credit card companies make money is through the interest they charge. Most offer interest rates between 8% and 24% annually. If people miss a payment, then most cards will raise the interest rates higher. Interest is how many people get stuck in a debt spiral. Their balance becomes too high and they are unable to pay off much more than the monthly interest. It’s very important to make sure that the interest is manageable and that bills don’t spiral out of control.
Popular Credit Card Providers
In theory anyone can set up a credit card company. But if stores and retailers don’t accept it, then what’s the point? Visa and Mastercard are typically accepted worldwide. American Express isn’t accepted in as many places, but often has many additional bonuses. Then there are additional cards like the Discover card which are a bit more obscure.
While these are the providers, you can access their card services via many different locations. Banks are certain to offer one of these providers. Many stores also offer their own brand that is used through the big providers. It’s important to remember that that the terms can differ greatly. One Visa can be drastically different from another Visa. Where you get it, will often dictate the exact terms. If it seems odd to be getting a credit card from a kiosk as you walk down the street or a fast food restaurant, then you’re probably not getting the best terms from these locations!
* Offer still valid as of 2022-04-29. For new customers only. Must spend $3,000 on purchases in the first 6 months. Other terms and conditions may apply.
** Offer still valid as of 2022-04-29. Earn an additional 1.5% on all purchases up to $20,000 spent in the first year. Other terms and conditions may apply.