Choosing Your First Credit Card

As there are so many companies offering credit cards these days, it is often difficult choosing the best deal. Therefore, where possible, it is advisable to obtain a credit card which is interest free for the first year with no annual fee. However, one must first decide which type of card to obtain between the bank issued card, the prepaid card or the secured card. Then, individuals need to be cautious of any card carrying an adjustable interest rate, as it is very easy to see the minimum payments rise when the interest rate readjusts itself at a later date.

So, for those with excellent credit, it is always best to get a bank issued credit with the first year interest fee with no, or at the minimum, a small annual fee. While there are many companies offering credit cards today, only the individuals with the best possible credit score can qualify for most. Thankfully, however, now there are both prepaid and secured credit cards as well as bank issued ones. Therefore, most anyone can have one type of card or another in order to do business online, shop and travel safely be it in advance or prepaid before using the card. Also, even prepaid cards can come with load or service fees, most of these fees can be from five dollars up to twenty dollars, so one wants to choose the lowest possible service fee related to a prepaid card when obtaining one.

Although secured credit cards require a balance equal to the credit limit to remain in a checking or savings account, monies are only pulled from the account in the event of default. Generally, secured credit cards have rates only slightly higher than bank issued cards. However as most people obtaining a secured card have at least some issue with relation to their credit report, generally if one wants to get a credit card, this can be the second best choice over a prepaid card. Whereas, a prepaid card requires the user to load value onto the card through either a transfer of funds from a banking institution or purchasing a card of a specific denomination to add on to the card. When working with prepaid cards however, it is always good to opt for a company which can provide one with a card with their name imprinted on the card. This is because such cards are often taken more easily with regards hotels and rent a cars when a persons name is on the card.

Individuals from investment bankers to radio and television financial gurus have been telling people all over the world about these new issues with regards to inactivity, late and over the limit fees can also effect credit ratings. Therefore, in order for individuals to avoid inactivity fees, one need use their card at least twice if not more in a year. As it is advised one maintain two credit cards, individuals can often see rapid improvement to their credit score over time when making their regular monthly payments or paying down a balance. However, if one is going to continue to use a credit card, in order to maintain credit reporting to build or rebuild credit, it is advised that one pay down any existing balances only by a thirty percent reduction in the balance. For, if one makes all monthly minimum payments on time, usually after six months to a year, one can see a turn around in their overall credit score as long as no other banks or companies have provided information on other delinquent accounts.

If one desires to pay off one or more credit cards, one always wants to pay off the cards with the steepest interest rate, then follow down the line accordingly. However, it is always good to have one card open for major purchases and another one for miscellaneous. This is because having two cards with good credit reporting can help improve a credit score over time. However, if one is going to keep using these two cards, then it is advised to only pay a third of the overall balance down at a time with regards to paying more than is due.

Rather than paying a credit card off in full, there are two other options which can help consumers keep their credit in good order. These are either to pay each card down to a third of the total balance, or, transfer the balance to a new card with a lower interest rate. Although, only individuals with near perfect credit ratings can qualify for many of the cards which may offer such a plan. This is because most are funded through banks and other financial institutions which after the recent crash, often hesitate to extend credit to individuals who have had problems with regards to paying their bills in the past, especially if talking about payments made on a credit card one is asking to transfer to the new institution. Regardless, it never hurts to try. However, one also wants to be sure that the interest rate reduction is one large enough to make a difference in the overall balance and minimum payments required and that the rate is not at all adjustable. In addition, one may also want to compare the annual fees along with any other potential fees on any card one wishes to obtain.

So, based on how one uses their cards, an individual can see their credit rating rise and fall over time. Therefore, only when requesting a duplicate of their credit report, can individuals know for sure that everything is as it should be on the report. Also, one then knows first hand how banks and other lending institutions are effecting their credit score. These credit ratings which are assigned by a number of credit bureaus are basically provided according to how many cards one has on file, how regularly monthly payments are made and with relation to any previous accounts having gone to collection.

All across the United States, and in many other countries as well, individuals can qualify for some form of credit card. For, even those with the poorest credit can generally still obtain either a prepaid card, a secured card, or both. Although, one still wants to be careful of fees related to both of these type cards. As there is generally a fee to load money onto a prepaid card which can vary widely. Whereas, secured cards require a balance to be on hand in a savings account to insure the card should one default on the balance at some point in the future. Also, although these secured cards may be easier to get, in the long run after one improves their credit rating, one may want to opt for a card with a lower interest rate. Last but not least, while bank issued and secured cards can effect credit ratings, prepaid cards have no effect. This is because prepaid cards have a limit set according to how much value on has placed on the card. Therefore, as there are no payments required, there is nothing to report to the various credit reporting agencies. Thus, allowing individuals to remain free from debt while still having the ability to use a credit card, which at times, can be much safer than cash. So, whether one obtains a bank issued card, a secured card or a prepaid card, one is most likely going to enjoy the freedom and safety such a card can provide over over time.

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