What is a credit card? You’re looking for a credit card and have so many questions. Every answer beats around the bush and you just don’t know what’s right or wrong any more. Furthermore, you have no idea what Credit Card Questions to ask or where to look for the best credit card options.
Question
What is a credit card used for and why use one?
Answer
Credit Cards are a convenient way to pay for many different products easily. When used right, they can help spread the costs of big purchases, earn loyalty points and cash-back rewards, give consumer protection and they can even help cut the cost of any existing debt you may have.
Question
Are there any downsides to using a Credit Card?
Answer
You’ll be hit hard by interest rates if you don’t pay the debt in full every month. Sometimes these rates can be very high and if you can’t work with money, chances are the debt will run out of control. Another thing to consider, using a Credit Card for cash withdrawals can be very expensive, You’ll be charged interest as soon as you get money and will be charged for every withdrawal you made.
Question
What is a Credit Card APR?
Answer
APR means: Annual Percentage Rate. It takes into account the interest rate and some other charges to determine the cost of lending for purchases on your Credit Card, loans and mortgages. You can also use APR to Compare the different Credit Card and Loan offers.
Because it includes charges, the whole APR thing can be a little confusing. Example: The interest rate of a product might be 14% per annum, but the APR might be 17%, that’s because fees add the equivalent of another 3% per annum. This means that an APR can be useful for a true comparison.
But a Credit Card with a lower APR isn’t always better, the different providers of Credit Cards all calculate interest in their own unique way and can apply other charges for lending like a early payment fee, or a balance transfer fee.
Personal APR: The rate won’t change depending on your credit score or your application, you either won’t get it or you will.
Representative APR: Here the interest rate you get is determined by your credit score, the lower your score, the higher your APR.
Question
Why Are Credit Ratings Important?
Answer
When applying for a Credit Card, the issuer will perform a credit check. If your credit rating shows to be poor, they can turn you down or not offer you the headline deal.
Rejected applications can also damage your credit history, that means it’s important to be realistic about the deals you apply for.
Question
What’s a soft search?
Answer
It’s also known as a smart search and lets you search for the perfect Credit Card for you without damaging your credit rating.
Do your Smart Search to Compare Credit Cards with Likemoney.co.za and get the best Credit Card for yourself.
Question
Is it possible to borrow money for free?
Answer
Yes. You get an interest free period in which no interest charges will be charged. It depends on the Credit Card issuer but can go as far as 56 days. That means you can borrow the money for free as long as you pay it back before the end of the interest grace period.
Do take note that this doesn’t apply to cash withdrawals where interest is charged from the moment you withdraw money. Most of the time there are extra charges when it comes to cash withdrawals.
Question
Are there interest free Credit Cards?
Answer
Yes. When money is spent on an interest free Credit Card, you won’t pay any interest for a predetermined period. The period depends on the card issuer and can be up to 2 years, but once this period runs out, you’ll be moved to a rate that’s not so desirable.
Question
Is borrowing money on a loan cheaper than a Credit Card?
Answer
This all depends on your circumstances, but you can get an overdraft on your card. Many banks offer a small and interest free overdraft, just talk to your bank before you slip into the danger zone because the penalties can be quite big.
Question
Is it better to repay a Credit Card or save?
Answer
It’s best to pay your Credit Card first as in most cases you’ll pay a higher rate on Credit Card debt than what you get on savings.
Question
What is the best Credit Card for you?
Answer
That all depends on what you need from a Credit Card, whether you’ll be using it to pay off debt or for weekly use.
But, whatever the reason is for you needing a Credit Card, shop around a bit first. Compare Credit Cards to make sure you get the right card for you.
Question
Can you get a Credit Card if you have a bad credit history?
Answer
This all depends on your circumstances but there are cards for people with a bad credit rating should your track record be less than perfect.
To avoid damaging your credit rating any further, do a Smart Search to see your chances of being accepted before you apply.
These are some of the most basic question people ask about Credit Cards. You can also read more about the different types of Credit Cards that some card issuers offer, see the rewards that come with the different cards and Compare Credit Cards to find yourself the perfect card. Should you have any other questions about credit cards or would like to just leave a comment, we’d love to hear from you.
Should you be looking for a specific type of card, try the Credit Card Comparison that likemoney.co.za does with all available credit cards in the country.
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