Credit is the reflection of your credit worthiness. It can be either good or bad. Based on this, companies are ready to loan you money or give you credit cards with a preset credit limit to spend within. The more credit worthiness you have the more favorable are the terms and conditions.

What exactly is a credit card? There are several definitions. A credit card is a piece of plastic having a magnetic strip, which is issued by a bank or business authorizing the holder to buy goods or services on credit or a card that allows someone to make purchases on borrowed money. Usual credit cards have a preset spending limit ($500, $2,500, $25,000, etc.) based on the cardholder’s credit worthiness and current income. These cards enable consumers to carry a balance from month to month on a revolving repayment cycle and charge interest on the outstanding amount. As in most of the countries of the world credit cards are one of the most popular forms of payment for consumer goods and services in the United States too.

Since you are spending borrowed money the payment of interest charges come inevitably. Interest is defined usually as an annual percentage rate (A.P.R.). It is the fee for the privilege of borrowing money. The price a person pays for the ability to spend money today, which would otherwise take time to accumulate. They are willing to pay double digit interest rate on regular purchases of gas, groceries and a host of other household items that are consumed much before the total card dues are paid. Surveys in U.S. show that an average family has a credit card balance in excess of $4,000. It pays around $800 a year on credit card interest and credit card debt accounts for a very sizeable chunk of total consumer debt. A whopping $1.5 trillion that means around $19,000 per household! So then, though credit cards are an important part of our day-to-day lives we must understand the importance of interest on us. We must understand the importance of selecting credit cards that are best for us; that maximize the benefits for us.

As we have said earlier living on borrowed money that has become normal now naturally involves cost. This cost is the fees charged by the credit card companies in terms of A.P.R., annual fees, and balance transfer rates and so on. A credit card will be called the best one if it gives discounts on all of these. Normally all best credit cards are low interest cards. Apart from this they offer zero annual fee, low or nil balance transfer fee, cash back deals, reward points for spends and even fraud protection. You can select the card that gives you the best in all of these.

But you must remember that best credit cards are offered to you only if you have good- -to-excellent credit rating. For this you should avoid overspending. You should check excessive frivolous spending. You should monitor your monthly payments and check if you really need those items for which you are continually paying installments. You should check the temptation of accepting unsolicited mails of credit cards that offer a host of benefits. You should also try not to carry a balance on your cards and pay the full dues every month. Try not to take too much card linked personal loans. In all, try for maximum optimization of your paycheck and enjoy the best of everything.

Low interest credit cards are the ones that give you the best deals. Normally their A.P.R. is below 15%, but they always give introductory zero A.P.R. offers. They usually come in either Platinum or Gold editions from Visa, Master Card and American Express among others.

The message is clear. You can have the best if you deserve it. You deserve it if you are worthy of it. And your worthiness is determined by your credit rating. Don’t get bowled over by the avalanche of credit cards–at times most of them are unsolicited. Try to be choosy, maintain moderation in spending and borrowing and don’t try to clear balances of one card by loading another. This way you will have continued good to excellent credit rating and you can enjoy the best. Get into a position to take your pick! But then, always be on the alert for the hidden costs.

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Author: Chinmay Chakravarty
Article Source: EzineArticles.com
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