Credit Cards

A credit card is a method of payment unlike a debit card, which pulls money directly from the user’s account. In opposition, credit cards allow the consumer to spend money at their own will. The total amount issued may vary from person to person and card to card; this amount is predetermined based upon one’s credit history. Keep in mind that credit history may make or break the ability for one to be accepted by a credit card company. It will also affect the amount issued to the holder. Therefore, the better credit history you have the more money you will be allotted when receiving a credit card. The amount of money available to spend is often referred to as the credit limit.

A monthly statement is sent to the credit card user depicting the purchases made, the total amount owed, and the outstanding fees. The minimum monthly payment is documented on this bill along with the due date. Essentially the credit card companies make money off the lending agreement through the interest rates. These rates are charged monthly based upon the total amount owed by the consumer. The rates may be waived if the balance is paid in full each month. If the monthly payments are not paid on time, this interest rate may increase significantly

It is common for credit cards to have added incentives such as frequent flier points and cash back. This is offered by numerous credit card companies due to the intense competition. Low interest rates may also be available, but only for a fixed time. Due to the competition, these incentives are offered primarily to encourage consumers to transfers their credit card balances from their old card lenders to the new lender and to encourage the spender to spend more money.