Now, Credit Cards Are Used For Everything

Category: Finance, Credit.

Credit cards go all the way back to the 1920s when gas companies and hotels issued them to pull in customers to their establishments. With an American Express card, a card holder could make purchases at any establishment that accepted the card.

In the 1950s, Diners Club and American Express began issuing universal cards to select customers. Bank cards didn t put in an appearance until the 1960s, but at least during the early years banks required a certain level of credit- worthiness before they issued a card to an applicant. Still, most consumers used their credit cards to purchase big ticket items: furniture, vacations, televisions- the kind of purchases that people were not likely to make every day. By the 1980s, almost anyone could get a credit card, regardless of their financial status. Now, credit cards are used for everything. It s convenient but it s also risky.

You can walk into a fast food place, buy a cup of coffee, and with a swipe of your credit card the transaction is completed. One of the biggest risks is failing to realize how quickly the balance goes up on a card when it is used to handle everyday transactions. What many card holders do not realize is how quickly the APR( annual percentage rate) on a credit card can jump from a merely outrageous 19% to a usurious 29% in the blink of any eye. Opening a credit card statement and facing the awful truth that the card has been maxed out, is something that most card holders have had to deal with at one time or another. An unsuspecting card holder need only be one day late In making the minimum required payment and that will be enough to trigger a jump in the APR on that card. Bank card companies take into account only the fact that the most recent payment was late by one day.

Moreover, it doesn t matter if the minimum required payment- or even the full balance payment- was made for the preceding 10 months. Even worse, the APR does not go back down when payments are back on track. For the sake of your credit rating, it is also a good idea to try and pay down your balance each month so that you are showing a balance due of less than half your credit limit. At that point, the best bet is to make sure you can pay the entire balance each month, thereby avoiding huge interest charges tacked onto your bill. When credit report companies look at your card history, that is one of the things they take into account in determining credit rating. So be aware of how you use your credit card on a daily basis, what your APR is, what you due date for payments is, and how much of a balance you are carrying on your card at any given time. Staying on top of your credit card situation is a key factor in your economic well- being.

Paying attention to a few credit card details can save you a world of difficulty and protect your credit rating.