A credit card can be a convenient way to pay for everyday items, but it requires responsibility. According to MSN Money, improper use of your credit card can cause your credit rating to slip below 620, which would make it difficult to get car or home loans. Get the answers to the frequently asked questions about credit cards before you start using one.
What is a Good First Credit Card?
If you or someone you know is looking into getting a first credit card, the number of choices can be overwhelming. According to online financial resource Bankrate, finding your first credit card can take some time. Find a bank or credit card company that offers a low interest rate and apply. Do not apply for more than one card at a time as multiple credit applications can bring your credit down. Try three cards and see if you get one. Once you get accepted by one company, stop applying. If the credit card companies will not give you your first card, try a department store card or a secured credit card account. A secured credit card account is one where you need to have the funds in your bank account to back up your spending.
How Much Can I Spend and Keep My Good Credit?
To build your credit and qualify for more credit in the future, you need to use the credit you have. According to MSN Money, the ideal amount of credit you should be using at any time is no more than 30 percent of the card's limit. When you get over that amount, pay your card back down before using it. By using up to 30 percent of your card's limit at a time, you are showing that you can maintain your credit accounts without maximizing them, and that you are a responsible consumer.
What if I Lose My Card or it is Stolen?
If you realize your card is missing, or it has been stolen, call the customer service phone number on your credit card bill immediately. Your credit card company will cancel your current account and issue new cards with a new account number on them. Your balance from your current account will transfer to the new account.
What is the Highest Interest Rate I Can Be Charged?
As of September 2010 there is no cap on the interest rates a credit card company can charge. According to a 2009 article in the New York Times, the Senate shot down legislation that would have capped interest rates at 15 percent. Credit card companies must notify card holders in advance about pending rate hikes and give consumers the opportunity to opt-out of the hike, according to the Credit Cards website. If you opt out of a rate increase, you will no longer be able to use your card, but you will be able to pay off the balance at the old interest rate.
What is the Difference Between a Credit Card and a Debit Card?
It is important to understand the difference between a credit and debit card. When you present your card to a clerk at a store, that clerk will normally ask you if your card is a credit or debit card. According to educational financial resource EdFund, a credit card offers spending based on a revolving line of credit that is not tied to any source of income. A debit card is tied to your bank account and the amount you can spend with a debit card depends on how much money you have in the bank.
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