Four Facts About Credit Cards You Need To Know

Credit cards can be a great tool. They can be used to earn trips. They can be used to avoid carrying large sums of cash. They can also be a major problem for people who do not use them properly. Getting a credit card is an important step, and there are some things the applicants need to know before sending in an application.

1. Credit Cards Can Cost Money

Many credit cards cost money to carry. Annual fees on common credit cards can range anywhere between $30 and $500 depending upon the card. Those with higher annual fees usually come with greater perks, but it is important to weigh whether the annual fee is worth the expense. There are credit cards that do not charge annual fees, and those who are not interested in rewards might rather opt for these cards.

2. Interest Costs Money

Credit cards can be convenient, and this convenience can lead people to spend more than they need to spend. Those who are unable to pay off their balance each month can get into trouble spending more than the actual cost of an item due to interest charges. Most credit cards charge between 10 and 20 percent per year on outstanding balances. This amount can add up for those who have made large charges over a period of months or years.

3. Credit Cards Can Pay Rewards

Holding some cards and paying off the balance each month can actually benefit some cardholders. Many cards will offer cash back. Getting one percent back by using a card on purchases that would be made anyway is smart. Other cards will offer travel rewards like hotel points or frequent flyer miles. These can be used for flights or rooms on future vacations. Of course, paying interest for failing to pay off the balance cuts into the benefit of these cards immensely.

4. Credit Cards Can Hurt Credit

Those who are unable to make the monthly payment on their cards can see their credit hurt immensely. Some people can get so deep into debt that it looks as though they might never escape. Those who find themselves in such dire straights might want to look to honest credit restoration companies that offer services like the credit repair by Lexington Law.

Credit cards can be a great opportunity, but this opportunity can also come with great responsibility. Those who are responsible can earn great rewards. Those who spend too much can get into serious financial trouble. Therefore, it is good to weigh the options when it comes to getting a credit card.

Read more »

What credit score is needed to buy a car?

A car loan is very useful especially if you do not have enough money to pay for it in full. If you are out looking for great deals with small interest rates, you better make sure that your credit score is in good shape.

1. Check your credit score. Your credit score should range within 300-850. The higher your score is the better. In order to get that car you’ve been dreaming off your score must be 650 or higher. That is already the boundary between good credit score and poor. A score lower than 650 won’t get you that car you’ve been dreaming off. Although some would still be willing to transact with you, the consequence is that you’ll be given a higher interest rate. With an interest of 5% or higher, you could be saving hundreds or even thousands in the long run.
2. Another thing you have to take care of is your credit report. Your credit report will contain your past activities and this may determine whether or not you will get that car. Check your credit report regularly; you get a free credit report annually from the 3 credit agencies so just ask for a new copy from those three agencies every 3-4 months. Scan it for false claims and errors and report them immediately to your agency to get them off of your report as soon as possible. Errors in your record can affect your chances with that car.
3. Next, if you want to improve your credit for that car, better make sure that you pay your bills on time. That move can give quick boosts to your score. And of course, not paying on time will just get you in trouble. Don’t forget that not paying in time will get your score marked for 7 years or even more. And they’re not easy to get rid of.

Remember that dealers often do a background check on customers before giving the go signal. They want to make sure that you are not a risk and that you will pay them on time. So it’s best to improve your score first before you go out looking for deals.

A good credit score will do more than get you a car, it will be easier for you to get other loans and it will also save you tons of money. Give your score a little push and it will be all worth it in the end.

Kyla Smith is an active blogger and shares extremely interesting financial management tips over the web that helps people to improve credit scores & build a working credit report.

Read more »