The Basics of Credit Cards, and How to Use One Wisely

Visa and Mastercard Credit Cards

Using a credit card seems pretty simple. You choose a purchase and then swipe or insert your credit card to complete the transaction. While this is the general premise of using credit cards, there is also so much more to it than that. Within that card in your wallet, there are many terms including fees, interest, and many other details that you should be aware of, or you may not use your credit card wisely. So, whether you have accumulated a substantial amount of credit card debt because you did not fully understand the terms, or you have just received your first credit card and want to avoid trouble, the basics of these cards are below.

Choosing the Appropriate Card for You

Many people choose to use a credit card based on an ad they saw or an offer they received in a mail. This is a mistake. With so many cards on the market, and the different types of cards, it is important to carefully consider any card before you enter into an agreement to use one.

The first step is to choose which type of card you want. You can choose a standard credit card, which is fairly basic and does not include any rewards or incentives. Or, you can choose a reward card that offers cashback, points, or other rewards with every purchase you make. Premium cards offer many more luxuries and incentives, while some credit card issuers offer cards that have low interest on purchases and balance transfers.

The type of card you end up using will largely depend on your credit score. For example, if you have a lower score, you are likely ineligible for premium cards. Obtain a copy of your credit report from one of the major reporting bureaus, such as TransUnion or Equifax to find your credit score and to review the report so you can correct any errors.

Once you have decided which type of credit card you want, and you have checked your credit score, you should then compare different cards within that category. Check the fees and interest rates to know how much a card would cost you to use. You can also use this information to compare similar credit cards, which will ultimately help you determine which card is the best one for you.

Managing Your Credit Limit

The best way to ensure that you do not get into trouble with your credit card is to manage your credit limit properly. The credit limit is the total amount the credit card issuer has approved for you to spend on the card. The limit of your card is based on your income, the type of card you have applied for, and your credit history. If you exceed your credit limit, you will incur penalties and could place your account in jeopardy, particularly if you do not make a sizable payment fairly quickly. Going over your limit will also affect your credit score and make it difficult to obtain more credit in the future.

Sometimes, card issuers increase your credit limit from time to time if your income increases or you have a history of using your account responsibly. If some time has passed since your last credit increase, you can also request an increase from your lender. Before you do this, though, it is important to understand how much of a limit you can afford and to never accept a limit that is higher than the maximum amount you can pay every month.

Reviewing Your Billing Statement

Most people understand that credit card issuers send a monthly statement every month. If you already have a credit card, you may make the very common mistake of simply throwing the statement away without even looking at it. Doing so could be very damaging to your credit report. The billing statement will outline all of the purchases and transactions you have made during the billing period. It will also state your outstanding balance, the minimum payment you must make, and the due date for that payment.

Although credit card issuers usually get all of the information within the statement right, that is not always the case. It is important to review every transaction and the amount of them, so that you do not pay for items you did not purchase. If you find an error on your statement, you can dispute it with the credit card company. Typically, you have 60 days from the date the credit card issuer mailed you the statement. You must also outline the dispute in writing. If you suspect that your entire account has been compromised, you can request a new card.

Making Payments

Due to the fact that you are only required to make the minimum monthly payment, it is tempting to only pay that amount. However, that minimum payment will only reduce your total balance by a fraction of the overall amount. The remaining amount will continue to collect interest and will likely also incur late fees, meaning it will take much longer to pay off. As such, you should try to pay off the total balance every month. If you cannot do that, you should at least try to pay off as much as possible.

If you cannot make even the minimum monthly payment, it is important to reach out to your credit card company and not just simply ignore the payment. If you do nothing at all, the credit card issuer will report it to the credit bureau, which will lower your credit score and make it harder to obtain more credit, and perhaps even potential employment opportunities. Many credit card companies are willing to work with you if you cannot make your payments, so it is always better to reach out to them first.

In Credit Card Trouble? Call Our Florida Debt Defense Lawyers

Unfortunately, some people are very careful with their credit cards but one unexpected expense comes up and they soon find themselves buried in credit card debt. In these cases, credit card issuers have the right to file a lawsuit against the borrower in order to recover that debt. If this has happened to you, it is important to enlist the help of a Fort Lauderdale debt defense lawyer. At Loan Lawyers, we pride ourselves on helping borrowers that have had lawsuits filed against them and know the effective defenses that can help with your case. Call us today at (954) 523-HELP (4357) or contact us online to arrange a free consultation with one of our attorneys.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations.  Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.