You always need
to take a number of very important things into consideration before signing up
for a credit card. Credit cards are serious business one wrong move and a few
late or missed payments and you can do damage to your credit rating that takes years
to correct. Likewise, you always want to make sure that you know exactly what
type of credit card youre signing up for. Though one may operate similarly on
the surface to the next, each type of credit card often has its own quirks that
you need to be fully aware of before you start making charges. The only thing
worse that missing a payment for a legitimate reason is missing one because you
didnt actually understand how your credit card worked in the first place.
One very popular
type of credit card, especially to new lenders and those with poor credit, are
pre-paid cards. Pre-paid cards operate similarly in concept to a regular debit
card in that your credit limit is tied directly to a specific amount of
money. If you want to make $100 worth of purchases during a particular billing
period with your credit card, you need to pay $100 in advance using one of a
few different methods. There are many advantages of pre-paid cards, one of
which is the fact that it is very difficult to make a late payment. If you
dont have money on your account, you wont be able to use the card at all.
Likewise, because people are less likely to abuse credit cards because the
credit limit is tied to a physical amount of money, pre-paid credit cards are
great for repairing damaged credit or building new credit where none existed in
the past. Anyone can sign up for a pre-paid credit card so long as they have
money to put towards the balance. Regular credit cards, on the other hand, are
only given to people who are considered to be safe borrowers with fair to
good credit histories or above.
A store credit
card operates very similarly to a regular credit card, with the main difference
being that it is only designed to be used in one location. If you sign up for a
credit card with your local electronics retailer, for example, you cant use
that card to buy gas later in the week. You can only use the card for purchases
made either in that specific store or through their online Web portal.
Balance transfer
credit cards are designed specifically to allow users to take the balance from
a high interest credit card and transfer it over to a card with more favorable
terms and conditions.
Hotel or travel
points cards are specifically designed to be used to book hotel and air fare
accommodations with certain businesses. One card may be branded with a
particular airline or hotel chain, for example. Oftentimes these types of cards
are targeted at frequent flyers and business professionals who are more likely
to earn cash back rewards and bonuses through these types of habits.
Gas credit cards
have become very popular in recent years, especially as the price of gas has
steadily risen all over the world. Certain gas cards will treat all gas
purchases equally, regardless of the retailer. If youre supposed to earn 100
points for every dollar that you spend on gas, for example, you will earn those
points on any gas purchase at any retailer in the country. Other gas cards,
however, are retailer specific. You may earn fewer points on gas purchases if
you dont go to the same retailer that has branded the card. In certain
situations, you may not earn any points at all as the purchases are deemed
non-qualified.
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