Avoiding The Pitfalls Of Everyday Purchasing With Credit Cards

By Author: Michael Strauss
Total Articles: 434
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Credit cards go all the way back to the 1920s when gas companies and hotels issued them to pull in customers to their establishments. In the 1950s, Diners Club and American Express began issuing universal cards to select customers. With an American Express card, a card holder could make purchases at any establishment that accepted the card. 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.

By the 1980s, almost anyone could get a credit card, regardless of their financial status. Still, most consumers used their credit cards to purchase 'big ticket' items: furniture, televisions, vacations - the kind of purchases that people were not likely to make every day. Now, credit cards are used for everything. 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. It's convenient but it's also risky.

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. 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. 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 14.9% to a usurious 28.9% in the blink of any eye. 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.

Moreover, it doesn't matter if the minimum required payment - or even the full balance payment - was made for the preceding 10 months. Bank card companies take into account only the fact that the most recent payment was late by one day. Even worse, the APR does not go back down when payments are back on track.

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. 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. When credit report companies look at your card history, that is one of the things they take into account in determining credit rating.

Staying on top of your credit card situation is a key factor in your economic well-being. 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. Paying attention to a few credit card details can save you a world of difficulty and protect your credit rating.

About the author: Michael writes for http://www.cardsense.co.uk/ where you can compare credit cards including the best balance transfer offers at http://www.cardsense.co.uk/balance-transfer.html - visit today to get a great new credit card deal.