Neon Funding has joined Cobalt Advisors and Saxton Associates in flooding the market with debt consolidation and personal loan offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2019 Reviews, the personal finance review site, has been following Neon Funding, Cobalt Advisors, Saxton Associates, Hornet Partners, Piper Funding, Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).
In 2019, a research was conducted on credit card debtors, and it was discovered that 70% of debtors fail to help erase debt by the end of the year.
Credit cards are a valuable resource, but only if you are vigilant about managing your finances. If you fail to do so, you could find yourself under the overpowering debt, which accumulates as a result.
It is crucial to know what you’re getting into before getting a credit card in the first place. We are here to help you with that by providing you with information on credit cards, and everything you need to know before taking credit card loans.
Credit Cards are Different from Debit Cards
Before getting a credit card, you must understand how it differs from a regular debit card. They may look alike at sight, but they have different principles of functioning.
Unlike debit cards, which draw amounts directly from your checking account, Credit cards do not operate the same way. When you use a credit card to buy something, you are essentially taking a short-term loan from the bank.
The more significant difference between credit and debit cards is that you are imposed with interest on your credit card loan, if not paid within the required period.
The two types of Credit Cards
Two types of credit cards are available to you; one is secured while the other is unsecured.
A secured card is usually taken when you don’t have a credit history or proven financial security. In that case, you are required to pay a cash deposit. The drawback of an unsecured credit card is that the cash deposit limits your available funds. More often than not, your available fund is equal to your deposit amount.
On the contrary, an unsecured credit card doesn’t require you to pay a cash deposit. The limit on your card is determined by your income and credit history.
Some Credit Cards Might Charge Additional Fee
Although there is a standard fee associated with most credit cards, it is highly likely that some of them might be charging you an additional fee. You need to be aware of these additional charges on your payments, some of them can include:
• Conversion fee
• Audit fee
• Technology fee
• Security fee
When you’re choosing a credit card, we strongly recommend that you inquire about these additional charges. A reliable credit card company will be open about any extra fee and might even offer exemptions.
If the purpose of getting a credit card is for infrequent use, a card with no annual fee would be perfect for you. It will save you the extra expense, which in most cases, can be as high as 300$.
Be aware of your APR
The Annual Percentage Rate, or APR, is the yearly interest rate on your credit card loans. To put it simply, it is the total annual fee you pay for availing the service of borrowing money.
The APR on your credit card loans can be as high as 30%. Before signing up for a credit card, doing thorough research on your options can save you from paying more than you need to on your credit card.
In addition to the regular APR on your purchases, you might be bound by the following types of APRs:
• Cash advance APR
• Penalty APR
• Balance transfer APR
Minimum Payment is not Sustainable
The option of paying the minimum amount that is due on your monthly credit card bill could be very tempting. However, it has massive drawbacks in the long run. The amount of debt will keep piling on and will put you in financial jeopardy.
Paying your credit card loans in full each month will keep you aware of your expenses and will save you from future financial instability.
Keeping a fixed and reasonable budget within your means will keep you from swaying towards minimum payments.
Be Aware of the Benefits
If you’re smart about your choice of a credit card, there can be several benefits that you can take advantage of. These benefits can be:
• Air travel miles
• Retail discounts
• Gift cards
• Cashback on specific purchases
To get a better understanding of these benefits and conditions, you must study the terms and conditions extensively. It will save you from losing these benefits unintentionally, due to a lack of understanding. It will also keep you from falling into the trap of companies that highlight only the benefits, and push you to ignore the underlying specifications.
It puts you under a legal contract
It is important to understand that signing up for a credit card loan is a serious commitment. It puts you under a contract bound by law. Along with enjoying the benefits, it is vital to abide by the terms and conditions of credit card companies.
Before signing the legal contract, you must be sure that you understand and can live by the following terms:
• All kinds of fees and extra charges
• APR percentages
• Credit limits
You can face serious legal repercussions, in case of inability to comply with the terms and conditions you signed on. You should not sign up for credit card loans if you’re unsure about sustaining its use.
Conclusion
If you’re undecided on whether to get a credit card or not because of the seemingly complicated terms, you don’t need to worry. By following these simple yet life-saving tips before taking credit card loans, you’ll be spared the complications.
By making smarter decisions and keeping your expenses in check, you can avoid overwhelming credit card debts and make the most out of this resource. We hope these tips were useful to you and wish you the best of luck in your credit card journey!
