No Having A Card Does Not Mean You Have Money
Most people advocate the case of credit cards, quoting the benefits and convenience that arises from them.
However, there is another group/line-of-thought that strongly opposes credit cards.
The reason being ‘Excessive Credit Card Debt’, which is one of the most serious problems faced by the credit card holders and credit card industry.
However, you can’t pull the shutters on the credit card industry just because of a few irresponsible people (or even if it’s more than few).
That is not a solution for beating excessive credit card debt. Moreover, you can’t overlook the benefits associated with the credit cards.
The issue of excessive credit card debt can be looked at from 2 angles.
First is addressing of the excessive credit card debt problem at the industry level and second is the addressing of the excessive credit card debt problem at the individual’s level i.e. at the credit card holder level.
The first method involves increasing awareness of the excessive credit card debt problem to the masses. This is more or less being done currently too.
However, there should also be an effort to tackle this problem of excessive credit card debt at an even deeper level.
This means trying to devise a mechanism to nip the problem (of excessive credit card debt) in the bud. This mechanism should actually be a part of the overall system. A lot of thought needs to go into devising such a mechanism.
Case studies should be taken up, statistics gathered and a proper forum formed (with representatives from the credit card holders and from the credit card suppliers).
As of now, the credit card suppliers just seem to be engaged in coming out with new products and getting customers enrolled to those products.
There is little attention paid towards addressing the problem of excessive credit card debt in the real sense. Something like attending mandatory seminars on the root causes of excessive credit card debt could be made part of the credit card application process.
Another way of dealing with the problem of excessive credit card debt could be: developing a system for calculation of applicable credit card limit at the individual level i.e. no standard/product-based credit limits.
Then there could be mechanisms for proactively warning the users about excessive credit card debt (based on their credit card usage)
or even imposition of early restrictions on noticing the first signs that lead to excessive credit card debt at the individual’s level,
the treatment of the problem of excessive credit card debt would include following of best practices (on credit card usage and avoidance of excessive credit card debt) by the individuals themselves.
A checklist or a set of questions could be provided to individuals for recognising the first signs of excessive credit card debt.
So, the problem of excessive credit card debt can surely be dealt with by putting together some serious thinking at a broader level together with discipline at the individual’s level.
Are Variable Rate Credit Cards Better?
When you shop for a credit card, you will be considering variable rate credit cards and fixed rate credit cards. A variable rate credit card uses the prime lending rate as its benchmark.
Each lender then adds his own interest percentage and offers the variable rate credit card to his customer.
Look at it this way – as soon as there is an increase in the interest rates of the Federal Reserve, the bank rates also go up.
The best situation to go in for a credit card with variable rates is when you notice that the prime lending rate dips steadily. That is when variable rate credit cards are a good option, since you enjoy the benefit of low lending rates.
However, don’t confuse the interest rate of variable rate credit cards with introductory offers made to you. These offers are
only to attract you and expire after a specific period, say two months or four months. Subsequent to this, your variable rate credit card will attract a higher rate of interest.
So don’t make these special offers a basis for your decision while looking for a credit card with variable rates.
Factors that could influence the interest rate of your credit card
When you are looking for a credit card with variable rates, your personal credit score and rating as well as your current income will influence the lenders’ decision.
Accordingly you can look at standard cards, silver cards, gold cards, platinum cards and titanium cards – with the hierarchy of the card ascending from standard to titanium.
So your eligibility for any of these variable rate credit cards is directly related to how good your credit history is, since interest rates are highest for standard cards and lowest for titanium cards.
In a variable rate credit card, the interest rate is likely to fluctuate periodically.
Some credit card issuers can tell you how low or how high the interest rates are likely to vary so that you can decide upon your variable rate credit card based on this.
If this fluctuation is still advantageous to you, as compared to a fixed rate credit card, you may consider a variable rate credit card.
No credit card is immune to interest rate fluctuation.
Since variable rate credit card interest rates are based on the prevailing market rates, you’ve got to watch out constantly to see if it is a good option for you;
if not you may want to look for another variable rate credit card where the issuer gives you a better deal. It is a very competitive market out there.
The Benefits Of Credit Card With Low Interest
There is no ‘one’ best credit card out in the market. Different cards have different features, and it greatly depends on how it is being used by the card holder.
There are times when one particular credit card type is better used over another type of card, but it would usually depend on the situation.
Credit cards give you freedom and flexibility in making unexpected shopping sprees, recurring bills, online purchases, reservations, and many more.
The benefits that credit card gives you are endless. But most people overlook the responsibility of settling their dues once the bill arrives.
Most people resort to credit cards having low interest rates in order to save money. And there are a lot of card providers having low interest rates. All you have to do is to choose among them.
The most sensible approach in paying back the debt incurred using a credit card is to go for cards having a low interest rate. Customers can choose between a fixed low interest rate and credit cards having low introductory interest rates.
Although you want to settle all your dues on time, there comes a time when you lack the needed money whether you like it or not.
But it would help to know that your credit card carries a low interest rate on your balances. You can save a lot of money compared to individuals having cards with very high interests.
Here are some benefits of credit cards having low interests:
1.if you carry balances, having a low interest card is reasonable; it is considered as a sound alternative when it comes to financial problems, especially those who can’t afford to settle the amount in full every month
2.low interest offers tremendous savings
3.great longevity; if you want to save a lot of money while paying off your balances, this is a good option
4.a good option for getting a balance transfer, it is affordable and helpful for those who are wanting to consolidate their debts
Responsible persons with good credit ratings will not find it hard to apply for a credit card offering low interest. Once you make an application, the credit card provider will surely check for your credit history. Others who don’t qualify can also be granted an application but with a lesser amount of credit limit.
You can secure an application online or you can go directly to the issuer. Low interest cards are available almost everywhere, from the mailbox to your radio, television, and the internet.
You have to pay close attention to specific details like introductory interest, APR percentage, introductory period duration, charges/rates on balance transfers, bonus features, additional fees or charges, and security features.
It is best that you use you credit card, with low interest, each time you make purchases that you will be paying off over due time. You can afford to carry a certain amount of balance on your account because of the low interest.
You can also use your card in making purchases in convenience or grocery stores for your daily consumption. If you make these kinds of purchases, it would be better to settle the amount due in full every month. You must discipline yourself especially with the use of a credit card.
Low or high interest, it doesn’t count much, just as long as you are a disciplined and responsible card holder.
When Do You Really Need Credit Cards?
If you don’t have a credit card or have one that you don’t use very much, you may be asking yourself: “why do I even need a credit card?”
Many people are sceptical about the need to have a credit card, even though so many others have more than one.
If you are not sure whether credit cards are really necessary, then here is some advice to help you to decide if you need a credit card or not.
Do I need a card?
The first thing you should ask yourself is whether or not you really need a credit card. If you have managed perfectly well for years without a credit card, and your situation hasn’t changed, then perhaps you don’t need a card.
If you have money saved then you don’t need a card for emergencies, and there is no need to pay fees and interest if you can live comfortably the way you do now.
However, if you find that you are unable to buy large items that you need because you cannot afford to buy them in one go, then you should look at getting a credit card.
Although you might not need to spend on a credit card because you are perfectly fine with cash or a debit card, not having a credit card can harm your credit history.
If you are a responsible spender then having a credit card will help to build up a credit history. Although you might have never been in debt, this can actually be a problem when you come to get finance such as loans or mortgages.
Lenders like to see that you can handle debt such as credit cards. Having a credit card simply for the purposes of improving your credit history is a good idea.
If you spend on the card wisely and pay your bills on time then you will have a better chance of getting great deals on loans and mortgages when you need them.
Another reason why having a credit card is important is security. Credit cards are much more secure than cash or debit cards, and you can stop people from taking your money. Also, if someone does use your card you are usually covered and can claim all or part of the costs back.
Card security also works the other way, and many retailers or service providers require a credit card for bookings or purchases. Perhaps the best examples of this are hotels, which often require a credit card in order to allow you to book a room or pay for extra services.
Of course, there are reasons why you don’t need a card. They are extremely tempting to use, and with high credit limits you often feel like you are not really spending money.
This can put you deeply into debt and will severely harm your credit rating if you cannot make the repayments. If you are someone who cannot easily control their spending, then you should probably steer clear of credit cards.
Are cards necessary?
Although credit cards can cause debt and other problems, for most people they are a necessity for everyday life, and are required for them to live their life properly. However, this doesn’t mean that getting a credit card is right for everyone.
If you are honest with yourself and look at your lifestyle, you will be able to decide whether getting a credit card is right for you. As long as you can make the repayments and you use the card responsibly, then having a credit card is a good idea.
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