Open the mailbox and you are usually bombarded with TONS of credit card offers! Chase, Wells Fargo, Bank of America, CITI Bank, etc., etc. free points, low APR- it can all be a bit overwhelming! So which credit card SHOULD you choose? Well, that depends on only you, I will try to help and outline them for you so that next time you choose a credit card you can make an informed decision. Now before I proceed I have to say- I am a FIRM believer in the ZERO balance. Credit cards are not bad if you do not keep a balance on them! Use your credit card(s) with care please, only put on it what you can pay off THAT MONTH. This will help your credit and also make you eligible to reap some great rewards (next blog). With that said- here we go!
Secured Credit Card: A secured credit card is- secured. That means that you have to put something (collateral) down to qualify for this card. This is usually cash but can also be an auto, boat, etc. This card is for you if you are a new credit user or are trying to reestablish your credit. Limits are usually about $250-$300 and fees may be involved. This can be a great way accumulate some credit history and show those companies how responsible you are.
Prepaid credit cards: I have to start off by saying you are being MISLEAD! This actually is not a credit card at all. What you put into the card you are able to use minus all of the fees that they charge you. Fees are usually to load, withdrawal from ATMS and a monthly fee. This card does not report to the credit bureaus since you are not making payments. This card is primarily for the convenience of utilizing a credit card but in my opinion, they're not worth all of the fees that come with them!
Balance transfer credit cards: A balance transfer card gives you a teaser rate usually ZERO percent interest for 6 months to a year on balances transferred over from your higher rate cards. This is a great way to get out of credit card debt IF you can be be disciplined with it. Transfer the balances over and pay them off in the allotted time. WARNING- If you do not pay the balance in full within this period, the interest from the ENTIRE period usually gets added to your balance. Save yourself a headache and write the date BOLDLY in a visible place.
Rewards Cards: MY FAVORITE!!!!!!! Ok, so I will elaborate more on this on one of my next blogs but you can earn rewards just by swiping that card. Rewards cards come in all forms; cash back, general, travel, gas, retail, automobile manufacturer, airline- the list goes on pretty much forever. With these cards $1 usually equals 1 point, once points are accumulated you can shop away!
Home Equity: This type of card is secured to your home. Limits are usually very high and this will show as a 2nd (or 3rd) mortgage on your credit bureau. I would not suggest having this much money on a revolving debt UNLESS you have a great investment you are sure you will be able to pay off. I will admit I do have one of these and use it for large investments only- primarily real estate. Do not use this card to go on a shopping spree! With limits this high- you will get yourself in trouble for sure!
So these are your options- stay tuned for my next blogs, Fees, Fines, and Interest- What to look out for on Your Next Credit Card and My Credit Card Payed Me HOW MUCH?!?!? The Joys of a good Rewards Card! :)
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