A credit card is also a debit card, issued to consumers to allow the user to pay a retailer for goods and services on an agreed contract by the card holder to cover the retailer for the agreed costs plus the other applicable fees. In most countries, it is usually very easy to apply for a credit card. Credit cards are issued either using money or with pre-printed cash. The process of applying for a credit card starts by getting a copy of one’s credit history from a credit reference agency such as Equifax, Experian or TransUnion. The credit reference agency makes all the necessary credit checks to ensure that the person applying for credit is whom they say they are.
With credit cards, the consumer is also able to choose between two methods of acquiring a credit card: the pre-approved or the swipe. The process of getting a credit card through the use of a debit card is very similar to that of a regular credit card application. The only difference between the process of a credit card application and a debit card application is the fact that the consumer swipes their debit card at the point of purchase in order to show proof of funds.
Pre-approved limit. A pre-approved limit is the amount of money that the customer can borrow against their credit card balance when they apply for a credit card. The amount will vary depending on the terms of the credit card. If the credit card company believes the consumer is likely to make purchases that exceed the pre-approved limit, they may increase the limit. Consumers can still borrow funds up to the pre-approved limit but cannot exceed that amount.
Swipe. Credit cards issued in the United States are considered to be debit cards. This means that consumers can only spend money they have already collected from the bank. In order to complete a transaction, the customer must first insert the plastic card into the reader at the point of sale. The customer must then wait a few seconds while the transaction is processed before being able to complete their purchase.
No balance minimum. When consumers want to spend money on items that they know they can afford, they usually choose credit cards with no balance minimum. When a balance minimum is put in place, the best credit cards will charge the most amount of interest possible because the customer will be charged a percentage of the balance that is accumulated. Because the credit card has an interest rate, it is often the deciding factor in whether or not the customer can pay down the debt over time.
No annual fees. An interest-free period (sometimes called an introductory offer) is a great way to take advantage of a no balance minimum or no annual fees. Many credit card issuers allow these features for six months at a time but after that, the credit limit and interest rate may be frozen. Before opting in to any offer that may have these terms, the consumer should read all of the terms and conditions to find out what other charges apply.
Free gifts and incentives. Some credit cards come with an incentive program that offers a certain percentage cash back or free merchandise. Other cards come with a special promotional rate. Both of these features can help to reduce the balances quickly. However, these programs will usually require that the user incur a balance and pay it off in order to benefit from the free gift or merchandise. These free gifts and incentives are usually only available if the user pays their entire balance every month.
No annual fees or balance transfers. One of the most important aspects of credit cards is to find one with no annual fees. Fees that may only accrue once each year add up quickly, and it is a better option to avoid accumulating any in the first place by paying the balance off every month. When there are no balance transfers or annual fees, it becomes easier to manage the debt.