Credit cards play a major role in our financial lives. In order to deal with it in a better way, it is important to update ourselves with credit card basics. Take a look at http://www.mc-credit.com/credit-card-basics.html in order to get all the required information about these credit cards in details.

The present generation is quite dependent on plastic money. Various banks have introduced different types of credit cards from time to time and encouraged people to use them rather than cash. But, it is important for a consumer to have knowledge of credit card basics in order to manage the cards well.

While picking up a card, the first thing that needs to be considered is the spending habit of the consumer. One needs to decide whether or not he/she is interested in paying off the balance in full every month of will carry forward the balance. A consumer who decides to carry forward the balance will have to look for a credit card with lowest possible interest rate. Irrespective of the spending habit, one should also opt for cards which don’t charge any annual fee.

The next important thing that a consumer should consider while taking out a credit card is the interest rate. This rate of interest can be fixed or variable. Normally, if someone pays his/her credit card balances on time, then the rate of interest will remain the same in case of fixed cards whereas the interest charges will change with the market in case of variable rate card. However, it should also be noted that credit card issuer may change the rate of interest at times and this will even impact people with fixed rate card. But again, it is mandatory for them to notify the consumer about the change.

The credit limit is the third most important thing to consider in case of credit card basics. This is the amount of money that a consumer will be able to borrow on his/her card depending upon the credit history. This credit limit may vary from person to person. It should be noted that consumers shouldn’t max out their cards or else it will have a negative impact on their credit scores. Also, maxing out cards may lead to a penalty.

The fees and penalties associated with credit cards shouldn’t be ignored. Some of the common charges that consumers need to pay include the likes of fees for balance transfer and cash advances, fees for increasing the credit limit, penalty charges for late payments, etc. So, one should make it a point to read through the terms and conditions of the card before signing on the dotted lines. Moreover, one should look out for cards which have reasonable fees.

Though there are fees and penalties attached with credit cards, there are incentives as well! Most of the credit card issuers offer reward programs attached to the cards. This encourages the consumers to use the cards more. As the consumer uses the card, the points get accumulated in his or her account which can be redeemed while travelling or buying air line tickets, etc.

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