What You Need To Know About Credit Cards

It's Saturday night and you and your friends are out having fun in the city. You and your friends walk down the sidewalk under the city lights and you notice an exquisite aroma in the air that makes your stomach growl like a beast and your mouth drool more than Pavlov's dog after hearing a bell ring. After your exquisite meal the tab comes and as you open your wallet you realize that you have no cash on you at the moment, but you don't worry because last week you signed up for a credit card and you decide to use it for the first time.

Many people use items without knowing how they exactly work such as a computer or a cellular phone. But there are some things where using an item while ignorant can result with negative consequences. Such an item is the credit card. Many young adults don't know the cruelties of credit cards and how they can ruin a person life because the only exposure to a credit card they ever had was when their parents used it and assumed that it was "magic money" because they were never exposed to how it really works.

A credit card is not "magic money" nor is it any kind of "free money". A credit card is borrowing money from a bank, and when borrowing from a bank a lot of other charges are added onto the amount borrowed which is more commonly known as interest. Interest is what hurts most people who are in credit card debt. They don't fully understand how interest really works and how it can be terminally harmful to their credit score.

However usually most credit card's come with a grace period in which the cardholder can pay off the debt before the interest is added onto the amount owed. However the way how interest works is extremely harsh. For example if a transaction for $1000 was made and you paid it off fully within the grace period no interest would be added. However if you failed to meet that payment by even by a penny, the interest would be added to the $1000 from the date purchased until it is fully repaid. Missing a payment is extremely moronic as it can increase the interest rate by an incredible amount unknowingly to the holder.

But because there are many different kinds of credit cards available for the public the competition is incredibly intense. To be more appealing than their competitors many credit providers offer plans such as frequent flyer miles, gift cards to various stores, and even cash back which is usually at most up to one percent of total amount spent which logically is miniscule to the average spender.

They also offer low or zero interest rate credit cards but these are only applicable for usually around six months to a year until they have their interest rate replaced to a much higher one unknowingly to the credit card holder unless they specifically sign up for the option of the credit providers to send them a notice if their low or zero interest rate is about to end if it is even available which if is even available usually requires a fee.

Though it may be scary to use a credit card after reading this, it is not the case. As long as the user is responsible, a credit card holder has nothing to worry about as long as they keep track of their transactions, not spend more than they can handle and pay off what they borrowed.

Tom Cribbs credit cards