"We perceive when love begins and when it declines by our embarrassment when alone together."Jean de la Bruyere
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Building Credit with Credit Cards
If you have bad credit, it is important to keep up with your spending to avoid poverty. If you are searching for a low interest credit card to repair your credit, remember most cards available have high initial fees and APR. Regardless if you have filed ...
Maximum Return On Your Credit Cards
There has been an explosion of credit cards that specialize in certain benefits over the last five years; reward points, cash back, 0% transfers, credit monitoring, discount gasoline, money-market savings, etc. So how do you get the most return from your ...
Secured Credit Cards 101
If you're thinking about a credit card, but don't want the hassle or the worry of a traditional unsecured card, then you might be interested in finding out more about secured credit cards. Secured credit cards are basically a savings account that uses a ...
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What is a credit card? I am sure most of you know what a credit card is, but here goes. A credit card is a 3 3/8 inch x 2 1/8 inch plastic card with 16 digits on the front and a magnetic stripe on the back. The card is issued by a bank for the purposes of extending credit to the card holder for financial transactions. The transactions are processed by Visa, MasterCard, Discover Card, American Express, etc. each time a transaction takes place. These processing companies charge a percentage of each transaction to the business owner of the company where the transaction occurred. So for example, if you buy a $100 product from XYZ Company, then XYZ Company owes the processing company a percentage of the transaction. If the percentage fee is 6%, then XYZ Company owes Visa $6.
Credit cards provide their card holders with a means to use credit without having to apply for a loan every time they need to borrow money. This ease of use is a definite benefit to consumers and it is why many people use credit cards for short term loans. Credit cards may also provide you with incentives for making a purchase with their card. You may see promotions such as 0% interest for one year, or 1% cash back on all your purchases, or six months no interest if you buy this weekend. They employ many different tactics to entice you to use their card.
So what is in it for the credit card company or bank that issues the card? Interest! You will pay interest on your balance carried and it is typically not cheap. Most times it is easily above a standard loan from a bank. The interest on credit cards is usually figured by taking the prime rate, the rate that banks can borrow money at, plus some amount of interest over and above the prime rate. The added interest is based on several factors, but most commonly your credit score. If you are interested in today's prime rate you can find it by looking on the US Federal Reserve website.
How can you get rid of credit card debt? There are several ways to address credit card debt. One is to diligently set aside your credit card payment each month and make sure the bill gets paid on time. Late fees are very expensive, they get added to your balance so they accrue interest on themselves, and if payments are frequently late the credit card company will probably increase the interest rate on your account. A second method people use to pay off their credit cards is to get a home equity loan and apply the proceeds of that loan to your credit card balance(s). This will pay off or pay down your balance and move the debt to your home where the interest is lower than your credit card. Also the interest on your home loan is deductible when figuring your taxes so you will see some tax benefit as well.
For more information on credit cards and the companies that provide credit cards simply run a search for "credit cards" on Google and you will get plenty of addtional information.
About the author:
Jason D. Barrett is currently focused on writing articles for InfoBriefs.com (Brief reports on several topics), ChildInsure.com (Child Insurance), and ScoutTechnology.com.
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