To begin with, have a legitimate reason as to why you even need to get a credit card.

Cash Flow

One reason to have a credit card may be to help with cash flow. When you use a credit card to purchase an item, you don’t have to withdraw money from your bank account. The funds in your bank account can be earning interest while you can still purchase what you need. Whenever the credit card bill arrives, you make one payment to the credit card company for the amount of charges accumulated for that month.

Access to quick cash from ATM machines is another reason some people want to have a credit card. This is handy for when you are traveling, on vacation, or away from home for extended periods of times. You will want to find a credit card with the lowest possible rate for cash transactions if you want a credit card for instant cash.

Rates and Fees

When researching all of your credit card options there are many details to check out related to their rates and fees. This information is usually included in the fine print of your agreement.

• Interest – Take note of the interest rates including special introductory rates, balance transfer fees, late payment fees, and other details.
• APR – (Annual Percentage Rate) which varies from one company to the next. Take your time and compare companies to find the lowest APR available.
• Benefits -  If you have good credit, there are credit card companies out there that will make you good offers. You may be entitled to some benefits as a new card holder.
• Rewards -  A credit card company may also offer you various rewards associated with your credit card. These may include reward points, frequent flyer miles, or cash back on your purchases. You may be able to apply the cash back towards your monthly payments. Not all credit cards offer rewards, so read the details carefully.
• Payments – You can pay the minimum amount required or any amount over that, including paying the balance in full every month. The minimum amount required per month will vary with each card, but most will be about 3% of your account balance. You may find some higher and some lower percentages. They will also differ on the period of time that is interest free.

There are many factors involved in choosing a credit card. If you don’t have a credit card be sure to make the right decision for which one will be a fit for you. Once you have done your research and reached your conculsion, make sure you understand all of the details in the credit card agreement. While credit cards are handy to have they can lead to problems if not handled correctly. However, if used responsibly, credit cards can help you obtain more credit, and also improve your credit score.

If you’ve ever tried to look at your credit card statement then you probably know it can be a little confusing to follow the first time. It is highly important to go over your statement each month to keep track of your spend and watch for any suspicious activity.When was the last time you took a detailed and unhurried look at your credit card statement? Understanding every detail printed on your credit card statement is not an easy undertaking?

You must read the fine print on your statement in order to understand and control monthly spending. It will help you to practice proper credit card management. You may be surprised by what you find when taking a good look at your statement and you discover just how your credit card works.

What is a credit card statement anyway?

A credit card statement is a list of all of your transactions during the previous month’s use of your credit card. Note that the month on the statement may be from the 10th of one month to the 10th of the next month. Credit card companies don’t necessarily bill you according to calendar month. Included on the statement are the total outstanding balance, payment due and due date.

A credit card statement has two parts. One is the payment slip which you detach and enclose with your payments. The second part is the part most people just skim over and never really read. This is the part that lists all your credit card activity. This is the part which we are going to examine.

Name and address: This is the card holder’s name and address that the credit card company has on file. If you have a change in your address or phone number, you should notify your credit card company in writing of the change and request an acknowledgement letter or send it with a return receipt requested.

Reference number: This number is the number that the credit card company uses to reference their records. If you ever dispute a charge on your statement, this is the number you will need.

Credit card number: This is the 16 digit number that’s shown on the face of your credit card. American Express or Amex is an exception to the rule and only has a 15 digit number. This is the number you should enter in the memo field of your check when you send in your payment, or if you pay by any other method such as by phone or online.

Credit limit
: This is the maximum amount your credit card issuer allows you to spend. If you spend more than this amount you will be over your limit and you may be charged a penalty for this depending on the credit card company.
Your credit limit may be increased if you have a good track record when it comes to payments. Paying more than the minimum amount each moth and paying on time can help you to get your credit limit increased.

Available credit limit: This is the difference between what you have already spent on your credit card, or your total balance due and what you have left to spend until your reach your credit limit. For example: if your credit limit is $5000 and you have already had a balance due of $4000, your available balance will be $1000.

Cash limit: Most credit cards allow you to take cash out on your credit card. Often a different interest rate is applied for taking cash out as opposed to purchases made. Your cash limit is included in your maximum credit limit, not in addition to it.

Statement date: This is the date on which your credit card company generates their bills. This is also the date used to calculate interest on your outstanding balance. You will continue to be charged interest until your outstanding is paid in full.

Payment due date: This is the date before which your payment must be received by the credit card company to avoid being considered a late payment. So be sure that your check reaches the credit card issuer well before the due date so that no late payment fee applied.

Total amount due: This is the total amount to be paid by you. This includes total unpaid purchases, cash advances, interest accrued and any fees applied.

Minimum amount due: To keep your account in good standing with the credit card company, this is the minimum payment you must make. This amount is usually 5 to 20 percent of your total amount due. If you do not pay the minimum amount by the due date, this will count against your credit score and you may be charged late payment fees.

Rewards point summary: If your credit card has a reward points system included, this is a summary of points earned on purchases and/or cash advances. The summary usually gives an account of your opening balance and the points earned and redeemed. Reward points and the method of redemption vary from one credit card to another. The total of your reward points should not be confused with any other balances or payments due on your credit card statement. These are merely incentives used by your credit card company and do not count towards your bill in any way.

Transaction details: This is the list of all of the transactions made during the billing cycle. It will include the type of transaction (whether it’s a purchase or cash advance), the place you made the purchase, the date of purchase and the amount charged. This helps you verify the validity of the charges to your card.

It is vitally important that you check your credit card transaction details regularly. This is the only way you will discover if all the charges made were actually made by you. If you believe that any charges were made fraudulently, report it to your credit card company immediately. It is also a good idea to keep all of your credit card receipts, that way you can compare them to your statement. Sometimes you may forget about a charge you made and believe it’s fraudulent when it’s actually not.

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You can always check with your friend who has recently got a credit card deal, since that might cut down the time needed for researching/hunting-for a good credit card deal. However, it’s really a matter of evaluating your own needs. If you travel a lot and to far off places by air, a card that offers you good rewards/rebates/benefits on travel would comprise a good credit card deal. Sometimes the airlines themselves have their own credit card issuing/supplying company from where you can get a good credit card deal.  For people shopping at a particular retail store or a shop, a good credit card deal would be a card that offers discounts, rebates and rewards on shopping. Again, the retail stores themselves might have credit cards on offer that could be beneficial to you. Then there are credit card deals that are linked to gasoline stores or big grocery chains. If you don’t have any specific needs, you might use a general purpose credit card that gives reward points on every purchase you make on your credit card. These points can then be redeemed for cash/rewards. Hence, this card could become a good credit card deal for you.

Good, for credit card deals, is really a relative term and there is no credit card deal which is equally good for all.

The card you use at the ATM is known as a debit card. When debit cards first appeared it was easy to tell them apart from credit cards. Debit cards didn’t have a credit card company logo on them; instead, they usually just had your bank name, your account number and your name.

Today debit cards look exactly like credit cards even carrying the same logos. Both types of cards can be swiped at the checkout counter , used to make purchases on the internet, or to pay for the fill-up at the gas pump.

When you use your debit card to make a purchase, it’s just like using cash. The account that is attached to your debit card, in most cases your checking account, is automatically debited when you use your debit card. The cost of your purchase is deducted from the funds you have in that account.

On the other hand, when you use your credit card to make a purchase you are using someone’s else’s money, specifically the issuer of the credit card, usually a banking institution.

In effect, you agree to pay them back the money you borrowed to make your purchase. In addition you will also pay interest on the money “loaned” to you at the rate which you agreed to when you applied for their credit card. This is known as the annual percentage rate (APR).

While the two cards might act and look alike, the levels of consumer protection that each type of card provides can be different.

Under federal law, if someone steals your credit card you’re only responsible to pay the first $50 of unauthorized charges. However, if you notify the credit card issuer before a thief is able to make any charges you may be free from all liability. If the credit card is not physically present when an unauthorized or fraudulent purchase is made, such as over the internet, you’re also free from liability for those charges.

MasterCard and Visa offer zero-liability protection where you won’t pay any charges if someone uses your credit card to make an unauthorized purchase.

The protection offered to debit card fraud is similar but with a few exceptions. For example, your liability under federal law is limited to $50, the same as for a credit card, but only if you notify the issuer within two business days of discovering the card’s loss or theft. Your liability for debit card fraud can jump up to $500 if you don’t report the loss or theft within two business days.

And if you are the type of person that gives a passing glance to your monthly bank statement, you could be totally liable for any fraudulent debit card charges if you wait 60 days or more from the time your statement is mailed.

Visa and MasterCard zero-liability protection applies to your debit card but only for transactions that do not involve the use of your PIN (personal identification number).

Additional protection against fraudulent use of your credit or debit cards may be available through your homeowner’s or renter’s insurance. Check your policy or with your agent for more information about your coverage.

Also be aware that you should contact your card issuer by certified letter, return receipt requested, after you’ve contacted them by phone to protect your consumer rights.

As for which card to use for what type of purchase, most experts agree that you should use your debit card for the same type of purchases you’d make as if you were using cash. Therefore, it makes more sense to use your debit card than your credit card at the grocery store or gas station (provided you have sufficient funds to cover these purchases of course).

Avoid using your debit card for any online purchase or for something which is expensive. Why ? You’ll find it much easier to dispute a charge when you use your credit card. If your gold-plated, limited edition, hip-swinging Elvis wall clock arrives broken, your credit card company will remove the charge until the problem is resolved.

With your debit card you are stuck dealing with the merchant directly to resolve any problems with a purchase, even if your banking institution could really use a gold-plated, limited edition, hip-swinging Elvis wall clock of their very own.

About the Author: © 2005, http://www.yourfreecreditreportnow.com
Author: James H. Dimmitt
James is editor of “To Your Credit” a FREE weekly newsletter focusing on managing your personal finances and credit. Subscribe and get a FREE copy of your credit report when you visit: http://www.yourfreecreditreportnow.com

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Why is the concept of secured credit cards so important?

As we know, credit card debt is a raging problem which is caused by improper usage of credit cards. Such people end up spoiling their credit rating to an extent where they cannot get another unsecured credit card (that is what we call the commonly used credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such people, secured credit cards are a boon. Secured credit cards present them with an opportunity to not only get a credit card in the first place but also to improve their credit rating by using the secured credit card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit limit etc etc). As they continue with these good habits, their credit rating gradually improves over a period of time. Hence secured credit cards provide them with the means of rectifying their mistakes (credit rating).

It’s not just the people with bad credit rating who go for secured credit cards. Some people go for secured credit cards because they don’t want to bother themselves with the bills etc for credit cards. They don’t like to even fill-up application forms for unsecured credit cards.

Then there are some who just don’t like to borrow money (even if it means borrowing from a credit card supplier by using their credit card). However, such people are very rare to find.

Some people just go for secured credit cards because they have heard a lot of horrifying stories on credit card debt – maybe someone from their family or one of their friends was devastated by credit card debt and they don’t want to repeat the mistake. So they decide to go for a secured credit card.

Whatever be the reason for going for it, the secured credit cards are surely popular too.

Through college credit cards, the college students are able to learn more about credit cards and their use. In fact, for most of the students, their college credit card is their first credit card that acts as a gateway to the world of credit cards. Some other students might have previously used supplementary credit cards linked to their father’s credit card account; however, for such students too, their college credit card is the first one that is truly theirs.

College credit cards are not very different from other types of credit cards in the basic sense; they function in the same way as any credit card would. However, there are some differences, which basically arise from the fact that college credit cards are used by people who have no prior experience with credit cards and who perhaps don’t understand the concept of credit cards completely. Hence, the credit card supplier is at risk with issuing credit cards (college credit cards) to such people whom he is not sure about.

Most of the students don’t have a credit history either. In such a case, the supplier of college credit card cannot be sure of receiving the credit card bill payments in time (and even receiving them at all). To counter such risks, the supplier of college credit card requires the parent of the student to co-sign the college credit card application form as a guarantee. Moreover, the credit limit on college credit cards is generally around $500-$1000 per month, which is lower than what it is for other credit cards (this credit limit is generally sufficient to fulfil the typical needs of a student).

Another risk mitigation instrument used by the college credit card suppliers is the interest rate or APR. The APR on college credit cards is generally higher than that for other credit cards. Again, this is done to dissuade the students from overspending on their college credit card (and finally not being able to pay their credit card bills).

However, if we were to look at these impositions in a positive sense, we would find that these are actually in favour of the student (who is still getting trained to take on the real world of credit cards).  Moreover, college credit cards also help the students in establishing a (good) credit history which is another important benefit that becomes handy when the student needs any type of  loan at a later stage in his/her life.

So, college credit cards are really something that every student should consider going for.

There are other fees associated with the use of a credit card besides the actual charge from each purchase. These other costs can add to the total balance on your account that you have to pay. The common credit card fees you will encounter at some point are the annual fee, the APR, late payment fees and the finance charge. The finance fee is added to it every month while the others are less frequent.

The credit card finance charge will be the dollar amount that you have to pay to the credit card provider for the use of their lines of credit to make purchases. This finance charge will be different depending on the APR or annul Percentage rate of the card. This is how credit card finance charges affect you card balance.

Your individual credit card company will have its own policies and approach to calculate the finance charge for your card. The outstanding balance will determine how much you will end up paying in credit card finance charges each year more than the APR will affect it. You need to understand how your outstanding balance is calculated.

The outstanding balance on your credit card may be calculated during one billing cycle or within two billing cycles. You must note that there are three types of balances which are used to figure the amount of your annual finance charges. These balances are the adjusted balance, the average daily balance, and the previous balance. Each of these balances has something in common, in that you will need to decide if new or recent purchases will be counted as part of the relative balance. When you have done this, you can then calculate the credit card finance charge. The finance charges will vary depending upon the billing cycle based on the carry- over balance and the timing of different purchases and payments.

Many of the credit card companies provide credit cards that operate under what they call a minimum finance charge policy. With this type of finance charge the cardholder is given a flat rate for the finance charges each year. This will mean that the rate will not vary or fluctuate because of differences in the cards balance each billing cycle. Your minimum finance charge is activated when your card has a carry-over balance that goes into the following credit card billing cycle.

There is no way to avoid the credit card finance charge. It is a necessary cost which must be paid in order to continue using the convenience of the credit line to make purchases. This means that it is important to have a good idea of how they work with your particular credit card company. You should have a working knowledge of what affects the charges that are added to your balance that you will have to pay. What would you do if you are assessed a wrong amount and then pay for something that is not applicable? You must spend some time studying your credit card terms and uses in order to know what to watch for.

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Article Source: Defining Credit Card Finance Charges