PLASTIC MONEY RULING EVERY POCKET

Almost every consumer and business in the U.S. has one or more credit cards. With these financial tools being so popular, there needs to be an abundant amount of information available on how to understand, apply for, and utilize credit cards in a responsible manner.

Learn the key credit cards terms, the different types of cards, and how to choose a card.

CREDIT CARD INTEREST RATES:FIXED RATE VS VARIABLE RATE

Credit card interest rates can either be fixed or variable. In reality, both interest rates can change, but there are stricter rules about fixed rate increases.

BALANCE TRANSFER

A credit card balance transfer is a type of transaction where you use one credit card to pay off another credit card's balance. Balance transfers can help you save money, but they can also lead to debt if they're not done right

JOINT ACCOUNT HOLDER AND AN AUTHORISED USER

There are two ways you can add someone to your credit card - as a joint account holder or as an authorized user. Both people can make charges using the credit card, but only the joint account holder is legally obligated to pay the credit card balance.

PREPAID CARD

Prepaid credit cards are simply Visa, MasterCard, or American Express branded gift cards that are loaded with money and used as credit cards where credit cards are accepted

SECURED CREDIT CARDS

A secured credit card lets you make a deposit against the credit limit on the card. If you're not able to get approved for a traditional credit card a secured credit card is a good option

TIPS FOR CHOOSING CREDIT CARD

There are different types of credit cards. It only makes sense that you'd choose them differently. Different features are important when you're choosing a balance transfer credit card than when you're choosing a standard credit card. Learn how to choose a credit card based on its type.

Choosing a Standard Credit Card
The standard credit card is the most common type of credit card. It has a revolving balance with an interest rate and finance charges when you carry a balance beyond the grace period.

Choosing a Secured Credit Card
A secured credit card requires you to make a deposit against the credit limit on the account. Secured credit cards often have more fees than standard credit cards.

Choosing a Balance Transfer Credit Card
Balance transfer credit cards are good for combining several credit card balances or for taking advantage of a lower interest rate

Choosing a Rewards Credit Card
Rewards credit cards give you free "stuff" based on your card usage. The key to choosing a rewards card is finding one that rewards you more than it costs.

Choosing a Student Credit Card
Student credit cards are designed for college-aged consumers who are just starting out with credit. These cards typically give credit to college students who lack a credit history.
FEATURES:

Credit Limit:

Your credit limit is the maximum amount you can charge on the card. This includes purchases, balance transfers, cash advances, finance charges, and fees. When you go over your credit limit, your creditor may charge a fee, an over-the-limit fee.

Balance:

The balance on your credit card at any given time is the total of your purchases, finance charges, and credit card fees. The higher your credit card balance, the lower the available credit you have to make additional purchases, unless you have a charge card or no-limit credit card. Higher balances raise your credit utilization and lower your credit score.

APR:

The annual percentage rate (APR) is the interest rate applied a balance carried beyond the grace period. Credit cards can have different APRs for different types of balances, e.g. balance transfers or purchases. Balance transfers and cash advances usually have higher APRs than for purchases.

Your APR may increase when you're late on your payment to a particular creditor, and other creditors if your card agreement includes a universal default clause.

APRs can be fixed or variable. A fixed APR can change, but the creditor must inform you in writing before changing the rate. A variable APR changes from time to time.

Grace Period:

The grace period is the amount of time you have to pay your balance in full before a finance charge is applied to your purchase. If you carried a balance from the previous month, you may not have a grace period for your new purchases. In addition, balance transfers and cash advances typically do not have a grace period.

When balances don't have an applicable grace period, interest is applied right away.

To find out the length of the grace period refer to the credit card application or your credit card agreement. Your monthly statements should also include the number of days in the grace period

Finance Charge:

The finance charge is the cost of carrying a balance. Finance charges are computed using your balance and APR.

Creditors use different methods for calculating your finance charge. They may consider one or two billing cycles, use an adjusted, average, or previous month's balance, and may include new purchases. The least expensive to you is the average daily balance method excluding new purchases.

In cases where you must pay a finance charge (no grace period applies), your creditor may assess a minimum finance charge. If your calculated finance charge is less than the minimum, you must pay the minimum.

Incentives and Rewards:

Some credit cards offer rewards and incentives for using their credit card. Rewards come in several different forms: cash back, points to redeem, and discounts.

Credit Card Fees:

There are different situations that you might incur credit card fees. Annual fee, finance charge, late fee, and over-the-limit fee are some of the most common fees