Credit Card Equipments

An Introduction To The Humble, But Oh So Powerful, Credit Card
By Ron King

It's hard to imagine doing business today without credit cards.
If you are 1 of the few who do not own a credit card, you
probably have difficulty renting a car or reserving a hotel
room. On the other hand, if you have a fistful of maxed out
credit cards and want a new one, you have a whole new adventure
ahead of you, too.

Let's start with the basics.

What Is A Credit Card?

The dictionary defines a credit card as: "A card which can be
used to obtain cash, goods or services up to a stipulated credit
limit. The supplier is later paid by the credit card company,
which in due course is reimbursed by the credit card holder, who
will be charged interest at the end of the credit period if
money is still owing."

In other words, whatever you charge to your credit card has to
be paid back within the credit cycle, or an interest amount will
be applied to the remaining balance. Sometimes, lots and lots of
interest.

Pros and Cons of Credit Cards

The obvious advantage to using a credit card is that it allows
you to purchase goods or services that you might not be able to
pay for immediately. The credit cycle of most cards is usually
about 30 days, and if the money is paid back in that amount of
time, there is no interest owed. This sounds good in theory,
just like an interest-free loan. But the bottom line is that
most folks don't pay off their balances on a monthly basis. This
is where the disadvantages come into play.

Any amount that isn't paid off within the monthly cycle will be
subjected to an interest charge. Depending upon your balance and
the rate charged by the specific card issuer, that amount of
interest could be huge. On top of that, many people will
continue to charge things to their card, and the balance and
interest keeps growing until they have no hope of ever paying
off the card by only make the minimum payment. This is a very
common scenario, and most of us know someone who has been in
this situation.

The Rewards of Good Credit

Chances are that every few days you get a pre-approved credit
card application in the mail. Sounds easy, doesn't it? Well,
before you accept this generous offer, read the fine print.
You'll see that many of these promotions come with hidden
penalties in the guise of high interest rates and annual fees.

If you want to get the best possible interest rate with no
additional fees, you’ll need to give the credit companies what
they’re looking for in your credit history. They will check to
see that you are responsible with your credit and that you have
paid your bills in a timely manner. These signs of stability and
credit responsibility will encourage the card company to reduce
the amount of interest they will charge you. Outstanding loans
with late payments and too much available credit will work
against you.

Although credit cards can be great for emergencies, they can
easily get out of hand. Before you apply for one, decide in
advance what you plan to use it for. If used with discretion,
credit cards can give you added economic flexibility and buying
power.

About the Author: Ron King is a full-time researcher, writer,
and web developer. Visit http://www.new-credit-card-now.com to
learn more about this fascinating subject. Copyright 2005 Ron
King. This article may be reprinted if the resource box is left
intact.

Source: http://www.isnare.com