Credit Basics for Credit Cards

• Credit cards are a widely accepted form of payment, especially when compared to writing checks. Plus, credit cards are usually safer than carrying cash or checks.
• If you do not agree with a merchant over an item purchased with your card, you may have the right to withhold payment depending on the circumstances. Buying expensive items with a credit card may provide you with more protection if the item breaks, does not work as advertised, or fails to meet your expectations.
• Many cards have grace periods that last as long as 25 days. Essentially, you are given an interest-free loan for a month before you have to pay off your charges. Of course, this strategy is only successful if you pay your balance in full each month.
• Credit cards are an extremely valuable source during emergencies that require significant amounts of cash quickly.
• You are able to track your personal expenses with your credit card statement. Purchases can be identified by category so you will know where charges were made and when.

A secured credit card means that a security deposit account is needed to secure the card. The security deposit will equal your credit limit. This amount allows you to build your credit history while enjoying all of the benefits of a credit card.

An unsecured credit card is set in accordance with your credit history. There is not a security deposit required for this type of card. As your history changes so will your credit limit.

Subprime is used to describe a group of consumers with damaged or no credit. Subprime credit card usually require a security deposit, annual or application fees, or higher percentage rates because people who apply for these cards have had credit problems in the past or have no credit at all.

Prime is used to describe a group of consumers with good or excellent credit. Prime credit card usually do not require security deposits or application fees. They also offer lower percentage rates and reward programs along with other benefits.

By law, in the United States, you have to be at least 18 years of age to receive a credit card. However, you are eligible to receive a pre-paid credit card. This type of card works by you paying in money and then the amount of credit you have is equal to the amount of money you send in. Also, you may receive a credit card under your parents or legal guardians by having them add you to their account. You will then receive a card of your own. If you are unable to repay the balance, your parents or guardians are then responsible for that balance.

A grace period is the amount of time after a due date of a bill that may pass before late fees are applied. Grace periods are usually 10-25 days and may depend on the company.

If you have a balance on one credit card and then you receive another credit card, you may move the balance from the first card to the second. The issuer of the second card then pays the first card off and charges you the amount of the outstanding balance.

Credit is the reputation you have earned for paying your bills on time that makes it possible for you to receive loans, etc. with the understanding that you will pay for them later.

If you are looking for a loan, credit card, or low interest rates, having good credit will increase your chances of getting one of these. If you have credit problems, it may be hard to acquire a loan when you need it the most.

If you suspect someone has used your name, Social Security Number or driver's license to obtain credit, do not wait. Follow the steps below to make sure that your credit is still in tact and that it will be that way in the future.

• Contact the fraud departments of the three major credit bureaus: Equifax 1-800-685-1111, Experian 1-800-301-7195 and Trans Union 1-281-874-0169.
• Report identity theft crimes to the local police or law enforcement agency in your area.
• Put a fraud alert on your credit file. Also, report the possible theft to all credit card issuers. In addition, make sure to cancel all your current cards.
• Notify your bank of the theft. Request new account numbers and a new ATM number and PIN.
• Consider changing your driver's license number if you suspect someone has been using it to write bad checks.

In some states, like Wisconsin for example, consumer laws favor consumers and that restrains some credit card issuers. Whether or not a particular credit card offer is made available to Wisconsin residents or residence of other states depends entirely on the bank and varies with each credit card issuer.

Before the bank mails out a pre-approved offer, they get a list of potential candidates from the credit bureaus. The bank sets certain criteria and then the credit bureau gives them a list of people who meet those criteria. Once the list is compiled, they send out a mailing with enticing offers and special deals to everyone on the list.

Technically, there are no hidden costs associated with credit cards. However, there may be application fees, start up fees, late fees or annual fees. Any fees of this kind will be laid out for you in the application process. The best way to know all the charges you may be receiving is to read carefully every piece of information that you sign your name to.

Yes, credit card companies can raise your interest rate and there is no telling how high a certain company will raise the rate. You can avoid this high interest hike by making timely payments every month, even if it is just the minimum payment. Some credit card companies will even raise your interest rate if you are late with other bills besides your credit card bill.