Credit card counseling has become an important part of financial planning, especially for young individuals as credit cards are used almost since teen years, and there are several hundreds to choose from. Especially when one considers that almost 25% of adults have a history of credit problems, mainly because they did not understand the fine print regarding credit cards to begin with, the importance of credit card counseling gets highlighted The credit card you apply for depends on your credit situation.
With the booming industry, several credit card directories, search engines have come into play as there are many options and utilities connected with each credit card. For example, Lending Tree Credit Card Search is a useful free service that lists up to 4 credit cards willing to issue credit to you. Just answer a few questions online, it's like pre qualifying without a credit check!
But it is always advisable to go for a credit card counseling session with a professional counselor. They are most likely to do the job better as they have a great deal of insider information not available to many people outside the industry. At any given time there are about 200 to300 different cards and they're various salient points which need to be compared carefully. A credit card counseling session should get you crucial information such as:
- Lowest Standard APR
- Cash Back Scheme
- Special Introductory Rate for purchases
- Longest Interest Free Period
- Lowest balance transfer rate
- What annual fee would you be prepared to pay
- Does history of bad credit matter?
A counselor in a typical credit card counseling session helps you choose between secured and unsecured credit
cards :
Unsecured cards: Unsecured credit cards are the ones that most people are familiar with. You do not have to put down any collateral
Secured cards: To obtain secure cards you must have some type of collateral. Many of these have turned out to be scams, or there are certain conditions attached: you have to have money in the bank to cover them, or you can only buy products from their catalog etc. There are several unique proposition credit cards that have finer points that need to be understood.
Department Store Credit
Cards: There are several exciting options for people wanting credit cards attached to stores. They often get discounts and special offers. The APR on these on department store credit cards can be in the range of 18-21%, and most people don't bother to notice that it's much higher than their MasterCard or VISA, which is 5-15% typically. To top it all this billion-dollar industry has a very strong tendency to come up with competitive schemes that need constant rechecking and reanalyzing. A qualified counselor who understands the trends can help not only with the choice of the credit card; but also at the time of late payments, interest reduction schemes, credit balance transfers etc. There is always a lot of value addition to be got with professional credit card counseling.
Then there is the whole issue of avoiding credit card debt scenario. The simplest rules, as stated in a credit card counseling session are:
Pay your bill on time : If you don't pay your bill on time, the credit card company will charge you a late fee. Usually these fees are very high. My credit cards charge between $20 and $30 if you don't pay at least the minimum by the due date. Also, late payments will end up on your credit record. To make sure you are not charged a late fee, mail your payment in at least 10 days before the due date.
Pay your bill in full
:This is the key to getting the credit card companies to pay you to use their card. If you don't pay the bill in full every month, then you will have to pay finance charges. As you will learn in any credit card counseling session, one month of finance charges can wipe out any benefit that you might receive from getting cash back. If you only make the minimum payment each month, it will take approximately 8 years to pay off your credit card bill, assuming that you don't charge anything else to it.
Charge only what you can pay
off: If you don't have the money to pay for something, then you shouldn't charge it. If you need something, you should save up enough money to pay for it before you buy it. If you save your money, and put it in an interest bearing account, then you win both ways. You are getting interest on the money for a month before you have to pay your credit card bill, and you are going to get cash back from your credit card company on the purchase. That way you and your credit card company will be happy!!
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