Using A Credit Card and Knowing What It Is

July 10, 2012 by  Filed under: Credit 

Today people seek ease in their daily financial activities. It should be simple, hassle free and non time consuming. Due to the unlimited demands of people and the growing needs of men, shopping lines has increased along with the growth of cashless transactions. Because of these basic changes, financial institutions and strategists have paved way to creating the answer to this problem which is the creation of credit card. This card is often called as the perfect solution to one’s financial needs. However, there will always be a downside to this innovation and that will be outlined in the next few parts.

What is a Credit Card?

This is a payment method used by many people to pay for goods and services through cashless transactions. It is not pre-funded which means that there is money running behind it. The idea of this card is to allow people to buy things and pay at a later time. There are rules to the usage of this card and this would differ depending on the bank where it was applied. Despite of the strict policies applied on the use of this card, it is still one of the most sought after service in most banks. It gives ease to many people especially those who encounter financial shortage and needs to purchase medicines or other basic needs. This is just one of the reasons why people should use credit cards.

However, there are many banks that became stricter when it comes to applying for a credit card because of the increasing rate of non-paying users. If you have plans on applying for this, you need to have a stable job with a good annual income along with a good credit standing plus a good work background. Everything shall be checked by the bank in order to increase safety and security on both parties.

Interest Rates and Why They Exist

Credit by the word itself means you have to borrow or lend. But it is just defined in various ways by different financial institutions. The more focused definition is more on the similarity of credit to lend. Thus, if you use a credit card, it is expected that there is an interest rate for the bank to utilize as their income. But the interest rate applied to in the card usage is part of the bank policy. The bank has the right to enforce a suitable interest rate for the type of card you are using. Thus it is important that before application of this card, you need to know the agreement, the policy, the fees and other important details such as suspension and closing of account. This is one of the downside of having a credit card – the fees and the high interest rates.

However, regardless of the aforementioned statements of credit card usage, it would be very admirable if you would be knowledgeable of what you are applying for. In this case, it is important that you ready yourself for the possible financial changes in your life. Credit cards has changed the way people live and that’s one thing you should remember.

Looking for a comparative list of credit card providers in Malaysia? Visit one of Malaysia’s top financing strategies provider. You will also see various options for investment, loans and personal deposit.

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