How to Keep Your Standard Card From Accruing a Lot of Interest

March 20, 2012 by  Filed under: Credit 

With the many different rewards cards available and cash back options, many people still carry just a standard credit card. The standard credit card is simple to understand and has no complicated disclosures or hidden fees or helpful perks. With the basic card, or standard card, you have a set annual fee that is due every year and you pay this fee to be able to use the card. Some standard ones have activation fees, but not all of them have this expense. It pays to research offers to find the companies who charge the least in activation fees and in annual expenses.

Credit limits on the standard card are typically based upon credit ratings. A person with a low to middle credit rating may have a smaller credit limit and higher interest fees. A person with excellent credit rating will often have access to credit limits that are five thousand dollars or more. Each card has a limit on how much can be spent so it is wise for you to check the limit before making purchases. Limits can sometimes change and it is also important that you consult with your credit card company to ensure that you will be notified before limit changes are made.

Each month as you use your standard credit card, the amount that you charge to the card must be paid in full within a certain number of days. If the amount is paid in full, the interest rate will not be charged to the account. However, if your balance is hundred dollars and you only pay fifty dollars on the balance before the bill due date, you will be charged the interest on the remaining fifty dollars. Each standard card has a minimum balance that must be paid each month. This amount can be a percentage of how much was charged or it can be a single dollar amount, such as fifty dollars or a hundred dollars per month.

If you do not meet the minimum monthly payment, not only will you be charged interest, you are also then subject to penalty fees and possible cancellation of the credit card. While many people are able to meet their minimum monthly payment, millions of people only pay the minimum and the interest continues to be charged. This can result in a very large debt within just a few months. Having a large credit card debt can put a person at financial risk and a person’s good credit score can be at risk as well.

To keep from overspending, set aside a certain dollar amount at the beginning of each month that you will charge to your credit card. This will help you to keep within a budget and avoid paying interest fees that can accumulate and result in a lot of debt for you. Saving for items and putting items on layaway, or only paying for half of an item on a credit card can help to reduce your spending and allow you to be able to afford paying off the balance in full each month as it is due.

Visit http://www.creditcardrates.com to find the best credit cards for you and some of the lowest credit card rates around.

Article Source:
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