Various studies have shown that American families hold more than 5 credit cards on average. In today's world, the importance of having at least one credit card per person cannot be underestimated. Asides from credit provided by the card issuer, cardholders have the issue of convenience to cope with.
Most businesses offline and online prefer to accept credit before debit cards. This is partly due to fringe benefits offered by card networks that make it possible for businesses to discount prices and common business fact that consumers using credit cards tend to spend more than those using debit cards or spending cash. In many instances, it is cheaper for a business to accept credit rather than debit cards and although some businesses will accept debit card payments, it's not uncommon to find that hidden fees are charged.
When shopping for credit cards, interest rates are unarguably the most important thing to watch for. Find a credit card that charges too high interest and you'd be in debt in little or no time most especially when you intend paying off your balance in installments rather than in full.
It's not as difficult as you may think to find credit cards that offer almost similar benefits and card features while charging low and highly competitive interest rates. The ideal strategy is to find a card that balances its features and benefits as well as credit offered with interest rates you can afford to pay.
Of course, if you intend paying up your balance in full at the end of each month, you would put less thought into purchase APR and more on card features benefits and other packages to take advantage of.
Another point to take note of is that more often than not, a standard interest rate will not cover all transactions relating to a credit card. Some card issuers charge interest rates separately applicable to purchase transactions, cash advances, and balance transfers, others charge a standard rate that covers only balance transfers and cash advances with a separate rate for purchases.
When searching for a credit card it makes sense to take note of the interest to be charged on a transaction to be used more frequently. If you intend going for a credit card to escape high interest rates on another card, the balance transfer interest should be of higher priority same applies to purchases and cash advances. Credit cards intended to consolidate debt or shoulder expenses of more than one dependent family member should charge a reasonable interest rate on purchases.
Credit Card Interest Rates are highly dependent on the credit rating of its holder. Card applicants with bad ratings and little history are more likely to have difficulty gaining acceptance on card applications hence will settle for those cards charging high rates with limited credit - in such cases a secure credit card may be needed to build better spending habits and a solid history over time. In contrast card applicants having excellent credit and solid history will find more favorable offers with lower interest and higher credit available. It doesn't always work this way but this is more of a general statement.
Cardholders are likely to witness a hike in interest rates after:
- A default on payment - Nearly all card issuers begin to charge higher interest rates after a cardholder pays late even if it's just once.
- A bounced check â€“ Yes. A bounced check could lead to higher rates as well as a fine depending on the credit card.
- Spending over the credit limit â€“ That's why this is never a good idea. Once interest rates go up card issuers rarely bother to review your situation except if prompted by you. New federal laws taking effect as from Feb 2010 will require creditors to periodically review credit card interest rate hikes and lower accordingly if the situation has changed.
- By universal default â€“is a general term for an industry practice that means interest rates will go up when you default on credit other than the credit card in question.