Print Article for : New Credit Credit Cards

Your Online Guide » Credit Cards » Types of Credit Cards

[N172]New Credit Credit Cards

by Art Gib, Art

Credit cards have revolutionized the way people shop. For example, with a credit card the need for checks and cash has decreased substantially and distance purchases are easier than ever. You have to be careful which credit cards you use though because some of them are definitely more costly to use than others.

Low Interest Credit Cards
Interest is one of the dangers that comes from using a credit card. If you are pretty good about making all your payments on time, interest rates may not worry you very much, but it only takes one absent-minded slip and late payment to find yourself penalized with a hefty financial consequence. Consequently, the lower the interest rate, the lower the danger of accruing large credit card debt. There are several low interest credit cards available, but the interest rate usually only stay low for six months to a year. This means you may have to keep switching cards to maintain a low interest rate account. There are other reasons you rates can rise too. For example, a late payment and the cost of lending money are two other factors that can raise your interest rates. Fortunately, a credit card company usually has to notify its clients before it raises its rates though.

Utility
Another feature you should consider before you apply for a credit card is its utility. After all, a credit card is only as useful as long as it is honored. For example, it doesn't matter how high your limit is on a card if a merchant refuses to accept that brand. Visa and MasterCard are two good choices for utility because they are widely accepted across the nation and the world.

Rewards
Some people choose credit cards purely for the rewards that they offer. These rewards can include anything from gas points, sky miles, vacation packages, and cash to rewards points which can then be exchanged for consumer products like bikes, games and electronic devices. Rewards can be very attractive and useful, but don't let them be the driving factor in applying for a card.

Extras Add Up
Other things to watch out for when you read over a credit card policy are additional fees. Try to avoid cards with annual fees, transaction fees or monthly fees. It probably won't be possible to find a card without late payment fees, but if you keep on top of your bills, those fees shouldn't

The most common credit repair mistake people make is putting off building new credit. If bad financial times have left you without open accounts you must start the rebuilding process now. No matter how successful you are in correcting derogatory items on your credit report if you do not have any open accounts your credit score will not get off the ground. Your credit score is based on both the positive and the negative information on your credit reports. Removing the negative is essential, but without open accounts in good standing the credit scoring formula has nothing to grade you on.

No Excuse for Delay

The logic most people apply in delaying the opening of new accounts as part of a credit repair program is the belief that it would be better to wait. No one wants to get denied. The problem with postponing the task of opening new credit is that it takes time for the new accounts to be an asset. The first few months your new accounts are open will be a drag on your scores. It is best to get started today and to let those new accounts become seasoned. Your credit repair efforts can be very satisfying if you do it right.

Get the Right Type of Credit

If the quality of your credit is not sufficient to be approved for regular credit cards, just get secured cards, they are every bit as valuable for your credit repair efforts. If you are rebuilding your credit from scratch you should get two new secured cards. While we are on the subject it is worth mentioning that not all types of credit are equally beneficial. Focus on building your credit with MasterCard, Visa, American Express, and Discover. Avoid store cards and consumer credit like furniture store loans at all costs when your credit repair project is getting underway. These forms of credit are of questionable benefit and may even depress the scores of those with little credit depth.

Managing Your New Credit

Once you have opened your new credit cards you can pump up your credit repair efforts significantly or you can become your own worst enemy. These new little credit cards can easily make a difference of one hundred points in your scores, in either direction, depending on how you manage them. The FICO scoring formula to a surprising extent hinges on the balances you maintain on your cards. Specifically FICO recognizes card usage in 20% increments. It is handy to be aware that if you want the largest credit repair benefit you should use less than 20% of your available limit. And if you max out one of your new cards you can expect a precipitous breathtaking drop in your scores. If this should happen to you, here is a bit of good news. All you need to do is pay your balances back down again and your score will pop right back up, just as quickly as the creditor reports the new balance to the credit bureaus.

Credit Repair and Installment Debt

Generally speaking, in the long term it is very good for your credit repair efforts to have a balanced mix of credit types. As mentioned above store cards and consumer debt, such as furniture store loans are the exception; if you are making a credit repair effort I suggest you steer clear of these debt types altogether. Once your credit is well established you can feel free to use consumer debt and enjoy the discounts that often come with these new accounts. Automobile loans and mortgages are a healthy counterpoint to well managed revolving debt. From a credit repair perspective both of these credit types should be part of a long term credit building strategy. Unlike revolving debt, which can influence your scores dramatically from month to month in either direction based on your balances, the real impact of these installment loans builds over time as the FICO scoring model give you credit for longevity.

Get Some Credit Repair Help

There are a lot of little details that can make a significant difference in your credit repair success. Unfortunately, not all of these details are a matter of common sense. You need to study up a bit. The credit reporting system and the FICO credit scoring model have evolved into densely complex systems. It is no longer enough to just pay your bills on time and hope for the best. It is not a perfect world and you need to look out for yourself, and it may take some work. Buy a book on credit repair or contact a legitimate credit repair service to light the path for you. You can do it. Good Luck!

Article Source : How To Make The Cards

About Author

Both Art Gib & Ian Webber are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Art Gib has sinced written about articles on various topics from Supplements, Teachers and self improvement and motivation. For more information on specific credit cards and their benefits, visit . This website features several different. Art Gib's top article generates over 1830000 views. to your Favourites.

Ian Webber has sinced written about articles on various topics from Home Management, Credit Loans and Free Credit Report Score. Ian Webber is an expert in consumer law and credit repair. Ian is a graduate of the London School of Economics and The University of Chicago where he earned his LLM. Ian consults with one of the leading online. Ian Webber's top article generates over 5400 views. to your Favourites.