Credit cards are convenient method of payment that can be used for just about any purpose. Despite the fact that most people have one, there is still much that is misunderstood about credit cards and how they affect your total financial picture. Understanding some of the more frequently asked questions -- and the corresponding answers -- about credit cards can set the course for more responsible use of them.
How Do I Choose the Right Card?
There are several key factors to consider when choosing a credit card. When you choose a card, find out whether or not there is an annual fee, what your interest rate is and whether or not it is fixed or variable, what kinds of terms are associated with the card and how flexible they are, what the card company's late payment policies are and the grace period for your monthly payment.
Is There Any Limit On the Number of Credit Cards I Can Have at Once?
Legally, you can have as many credit cards as you are approved for. However, more cards do not always equal better. In fact, in most instances, the more open credit card accounts you have, the more negatively it can impact your credit history. According to Bankrate, it is better to have fewer cards with higher limits than numerous cards with lower limits.
Is it a Good Idea to Consolidate Cards if I Fall Into Debt?
If you have numerous credit cards with the same interest rates, it is not necessary to consolidate cards. However, if you have one card with a lower interest rate than the rest, it might be worth it to consider a balance transfer to that card to make it easier to get your debt down faster. This is also beneficial if you need to free up some credit on one of your credit cards.
Should I Choose Secured or Unsecured With a Higher Interest Rate For Bad Credit?
Obviously, if you have bad credit, your card options are limited. However, avoid credit cards with high interest rates and numerous miscellaneous fees at all costs. Instead, sign up with a reputable credit company for a secured card. While the amount of available credit only equals your deposit, you have a chance to rebuild by making on-time payments and qualifying for credit increases as you continue to show the company you are creditworthy.
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