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How Credit Cards are Billed
Credit cards differ from conventional loans in repayment as the amount can’t be spread over a fixed period. Minimum monthly payments are required as specified in the terms.
The amount for minimum payment is mostly 2 percent of the outstanding balance. However paying only minimum amount each month will increase your debt. Late fees and higher interest rates on cash advances are also possible.
Students have to make their own decision on whether they are ready for the responsibility of a credit card. Getting one is much easier than managing it and you can easily end up running a huge balance that is attracting interest but without payments being made. A study found that from 79 percent of students with multiple reasons for using credit cards, just 13 percent were able to restrict card usage to emergencies alone.
Your need for a credit card should be preceded by asking yourself certain questions. Do you really need a credit card and can you afford one? Will you be able to repay the balance every month?
Having made the decision to get a credit card, the smart advice is to shop around. The factors that you need to consider include low interest and finance charges or the APR, low or no annual fees, a grace period prior to finance charges being levied and additional benefits like purchase warranties, free gas, airline miles, etc. Credit card info.com reports:
Unlike repayment on a traditional loan, such as a student or car loan, credit cards do not allow you to spread the amount you owe over a fixed period of time. Instead, you are required to make a minimum monthly payment, which is the smallest amount you can pay and still meet your cardholder agreement (the terms you agree to when signing up for the card).
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