Choosing the Right Credit Card
When a purchase is placed on a credit card, the consumer borrows money from a lender (a credit card company). Credit limits, or the maximum amount of money that can be borrowed, vary and are based upon each individual.
Before choosing a credit card, be sure to find the one that’s right for you. There are many types of credit cards, including the following:
- Secured
- Zero or Low-Interest
- Business
- Rewards programs
- Student
- Pre-Paid
Criteria that determines and affects credit card approval includes the individual’s ability to make payments and recoverable assets in the event of delinquency. Payments are due in monthly installments; failure to make timely payments results in higher interest rates, an increase in balance due and a lower credit score.
Additional benefits of credit cards are the 20 to 30-day grace period in which the card user has to pay the balance on the card before interest is charged.