There are various types of credit cards available on the market but not all work the same way. Some are for budget-conscious spenders, others for reward seekers.
Is it good or bad to have a credit card?
It depends on how you spend your money and how pay your debts.
If you are money savvy, credit cards are excellent to help manage your funds and get them to work harder for you.
Use them as a payment tool, don't withdraw cash, take advantage of the interest free period, if you get one, and avoid paying interest.
For those who are less organised with their finances and accumulate debt, a credit card is not recommended, but you may need it to make emergency payments, or to purchase online, or simply to feel that you have covered all your needs.
Usually credit cards, Visa and Mastercard, have:
They come in all forms and shapes and the features are so different that you need to compare everything to make sure you get the best deal that matches your spending style:
From a bank's perspective you are an excellent client if you pay only the minimum amount shown on your statement every month. This means it will take you a long time to pay off your debt. Many years if you borrowed in the thousands. And all the interest will just show nicely on the bank's results.
From your perspective, paying only what your statement asks for is heading for trouble. Whatever you bought on credit will end up costing you much more than if you paid in cash.
Credit cards are helpful when you make purchases. They are hurtful when you withdraw cash.
With purchases you may have a number of days during which you don't pay interest. With cash you pay interest from the second you line up your pockets with the money you took from the ATM.
Banks would love you to access your money via cash advances. But you should know better.
Each bank can have their own requirements. Here are some tips:
The banks have access to your credit history so it better be good. This means you should have paid all your debts when they were due and did not have financial issues in the past. This should make the approval process faster.
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