After reading this question 1st thing that comes into your mind is what is a credit card? It’s a payment card which allows you to borrow money to pay a merchant or a seller for goods and services. Before the use, the card holder has to promise to the bank that you will pay the borrowed money within the grace period. If you cross the time period you have to pay an extra charge. Credit card is different from a charge card / debit card, where it requires the balance to be repaid in every month, credit card allows the consumers to spend money in advance.
Advantages of Credit Cards
- You can make a large purchase now without paying actually and pay it off later or as EMI.
- Your card statement makes budget management easy.
- It’s always easier to carry a single card compared to a bundle of cash.
- You can earn points or credit score, which will be useful later on.
Disadvantages of Credit Cards
- You can easily go out of balance if you’re not careful about your spending.
- The simplicity of using credit cards can cause you to overspend then your budget.
- Interest rates are low in start but seem larger over time spent.
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Technical Intro of Credit Cards
1. Most credit cards’ dimension: 3.370 inch × 2.125 inch
2. Layout of credit cards: Rounded corner with 2.88 – 3.48 mm radius
3. Standard of credit cards: ISO/IEC 7810 ID-1
Note: ATM cards and other debit cards also come in the same size.
Credit cards have a stamped or printed bank name and number. The prefix of card number is called the Bank Identification Number. It is the sequence of digits at the beginning that find out the bank, to which a credit card number belongs. After that the first 6 digits are for verification of Visa and MasterCard. The next 9 digits belong to your individual bank account number, and the final digit is a validity check code.
Credit cards have a magnetic stripe which is like a debit and other payment cards. Nowadays many modern credit cards come with a computer chip embedded in them for a security feature. Cards also come with an expiration date and an issue date, as well as some extra codes are also like security codes. All the credit cards have unique codes and unique numbers of digits.
How to Choose 0% (Zero) APR Intro Credit Cards?
When you are applying which credit card to get, first check your self-confidence and say:
I will ready to pay high interest rate on my outstanding amount
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If you are able to pay your credit card balance on time each month, then you won’t be charged for any interest or extra money. In that scenario, it’s worth it to get a credit card with reward points. These credit cards give you points, free cinema tickets, cash or airline miles every time you use them. Though, rewards cards also have higher interest rates – sometimes it’s high enough to wipe out all the value of the rewards you earn. If you want to minimize your interest payments, then you should pick a credit card that has a low interest rate.
Credit cards are issued by a bank, like City Bank, Bank of America etc… All benefits, terms and conditions, interest rate, fees and rewards vary from bank to bank, so it’s important to find that bank who offers a card that you like.
Currently, there are credit cards with 0% APR intro on balance transfers and no hidden charges.
In general, the better you spend and earn credit points, the better low APR intro credit cards you can qualify for.
Credit Card Fees and APR Charges
APR for Purchase:
This APR for purchase is nothing but an interest rate that will be charged on whatever you didn’t pay off the month before. The APR is the Annual Percentage Rate, its yearly interest charge on your credit card, so every month, you’ll be charged 1% of the amount. On some cards, they give offers that you won’t be charged any interest for the first 6 months.
How Different APRs Affect Your Credit Card Account?
- Purchase APR (Applied to credit card purchases)
- Penalty APR (When a user is failing to make payment on time, this penalty is applied as per violation of the terms and conditions. It can be highest APR)
- Cash advance APR (Withdraw cash from your credit card charges you high. For balance transfer, cash advance may be APR is different )
- Introductory APR (It’s lower APR for limited time period or for promotion)
Some Important Things of APR for Credit Card Holders
- The APR can help you in evaluation of promotions and offers.
- You should review T&C and APR conditions before using the card.
- Leaders cannot change the APR for 1st 12months. The only time an APR changes is if it’s in promotional period or variable rate.
- In most circumstances, banks must give 45 days advance notice of any changes.