Introduction to Credit Cards
Credit Cards, much like a personal loan, are both based on your credit
score (typically FICO) and oriented upon the available funds outlined in
a predetermined 'line of credit' within a financial, or other banking
Understandably, the higher your credit score is, along with salary, and
previous (positive) history, the more likely you are to get a good deal
on a (revolving: meaning monthly payments of) credit card, as well as
interest rate, and overall approval. Unlike loans however, some credit
cards require a minimum payment per month, and then any additional funds
paid will be applied to directly pay down the interest that has or is
accruing on your credit card and spending habits that month - or in
Other credit cards, however, do in fact require that you pay off the
entire balance monthly - also known as non 'revolving' credit cards.
understandable that such a more stringent credit card and plan would
likely be linked to someone with less than desirable credit, or as a
'higher risk' consumer.considered likely to fail to pay back funds.
Like loans and similar banking institutions, often the same criteria and
credit unions themselves whom offer banks or checking accounts also
offer lines of credit and credit cards. These are different than charge
cards however, as typically 'charge cards' are the ones in which require
the full amount paid off monthly.
For those that may not qualify for a credit card due to a poor (FICO)
credit score, not enough salary, or insufficient credit usage history;
outside of a co-signer, it is also possible for one to apply for and
successfully obtain a 'secured credit card'. A secured credit card in
essence is one in which is created and based off of a collateral
amount.required upfront by you before opening the ('secured') credit
card. While some secured credit-card plans might allow you to spend up
to $500 with a $250 collateral deposit, most will be more
focused - realistically - on honoring and simply providing you with the
maximum aggregate limit of that in which you.ve put up in collateral.
It's also worth noting that, unfortunately, most secured credit-cards
have terribly undesirable interest-rates and can be difficult to even
qualify for in some instances. Although it's an alternative to
positively raising your credit, it inarguably comes at a heavy cost in
In today's modern world, credit cards are not just used as funds to pay
for cyber-purchases, but are specifically being more frequently backed
by their primary companies - such as Visa for example - in guaranteeing
your money, or purchase in the case of an item being lost, stolen, etc.
which are all very desirable benefits and traits of doing business with
your credit card - and in sharing your personal data online to make
It's worth pointing out that like anything in life, especially regarding
finances, there can easily be pro's and con's, dependent upon your
spending habits, sense of responsibility, personality, and so forth.
Just as a secured or unsecured credit-card can be used to build credit;
likewise it can be used to destroy your credit with irresponsible
spending. Also, some creditors and general banking institutions have
pointed out that having more credit-cards is not necessarily .better.,
nor is it considered in any way 'impressive'. In fact, many people that
have a swath of credit cards in their wallets may feel more inclined to
often spend.in many unfortunate instances, more money than they actually
have, or is available to them by default. For example, those that abuse
or take advantage of overdraft protection to withdraw and use funds
without the intentions of repaying the debt or .covered charge..
Keep in mind and familiarize yourself with the terms cash, credit, and
debit. Cash, of course, the money in your pocket, versus credit which is
an amount in which you can 'charge off' on your credit card (from a line
of credit, and typically pay at the end of the month or make payments
towards), and then lastly Debit, which is the direct withdraw or
charging of current funds connected to the account in which is aligned
with your debit card - such as a Checking Account for example.