People view credit cards in different ways. Some view credit cards so negatively, what with the number of people getting buried in credit card debt and finding no way out. For these people, the credit card experience started off as positive but soon turned sour, and it’s very likely they wouldn’t want to get a credit card again or they would advise everyone they know to stop using theirs as well. Some people however know that credit cards can actually be quite advantageous. For these people, credit cards are heaven-sent and can be used for a number of important transactions. The fact is that a credit card is a tool, and just like any tool you have to understand how it works in order to use it properly.
Using Credit Cards to Your Advantage
With a credit card you can purchase something even before you have the money to pay for it. This is useful because your income only comes every payday, and there are times when you really need to buy something but you don’t have the cash for it at the moment. With a credit card that problem is solved, because all you have to do is swipe now and pay later. You can also use a credit card to take advantage of the best deals online – discounted plane fares, supermarket coupons, and others. Without a credit card it will be very hard to grab these deals as they come. A credit card can also be used to purchase a very expensive item on an installment basis, and this is something you can’t do with cash. Credit cards can be used to your advantage, but you have to know how interest works.
The Way Credit Card Interest Works
Every time you purchase something with a credit card, your credit card company will charge you for that amount. Depending on your cutoff date, your credit card company will charge you for today’s purchase sometime in the future – as far as 45 days from now. It’s important to note your cutoff date so you can schedule your purchases accordingly. The most important thing you should know about credit card interest is that it is compounded. If your credit card company charges you 3% on your balance for this month, even if you partially pay for it, another 3% will be charged on the total unpaid balance next month. It gets compounded every month, and this is why it’s best if you pay your total balance due every month to leave nothing for interest. If that’s not possible then you can always turn to a balance transfer with zero interest.
Balance Transfers with Zero Interest
These balance transfers will be useful for those people whose credit card debts are so high already. You can transfer your entire credit card balance and come up with a scheme that you will pay a specific amount monthly over a fixed period of time. Eventually you will be able to pay off your entire debt, but the important thing here is that you commit to paying for the fixed amount every month. Some companies offer balance transfers with zero interest, so you can pay for your entire debt without incurring additional interest charges.