Credit cards, or plastic money, are found the world over and can get money into, and out of, the Internet.
Even if you already have a credit card it is useful to have a card dedicated to your use on the Internet.
Debit Cards.
Debit and credit cards look alike, but they’re two entirely different payment methods.
While a credit card is a "buy-now, pay-later" tool, a debit card draws funds from your bank account.
Since your purchase is automatically deducted from your bank account, make sure you have the money available now to cover what you buy .
Credit Cards.
Study your card agreement
Note the grace period, annual fees, cash advance fees, finance charges, and annual percentage rate (APR). If you intend to carry a balance on your account, look for a lower APR, even if it means paying a higher annual fee.
Use credit wisely
Keep track of your current purchases. Avoid large impulse purchases. Don’t use a cash advance to cover normal daily expenses. Remember the 20/10 rule: never borrow more than 20% of your annual net income; and never let your monthly debt payments become more than 10% of your monthly net income.
Know your limit
Exceeding your credit limit is considered a violation of your account agreement and may result in additional fees or penalties, or the freezing or cancellation of your account.
Pay off your balance within the grace period
For most cards, you can avoid finance charges by paying off your total balance within an established grace period. It’s like an interest-free loan for up to thirty days.
Make more than the minimum payment
If you can not pay off your total balance each month, then at least try to pay more than the minimum required.
Pay on time
Be sure to get your payment in before the due date to avoid a late fee and possible credit damage.
Keep in touch
If you change your name or address, notify your lending institution immediately. You don’t want to risk a late payment. Also contact your lender if you cannot make a payment on your account for any reason. They might be able to arrange special payment options that help you avoid credit problems.
Remember: credit counts for loans
Financial institutions evaluate you based on the “3 Cs“...
Character - credit history;
Capital - assets that can be used as collateral; and
Capacity - your ability to handle the added debt based on your current income, debt, and expenses.
Even if you already have a credit card it is useful to have a card dedicated to your use on the Internet.
Debit Cards.
Debit and credit cards look alike, but they’re two entirely different payment methods.
While a credit card is a "buy-now, pay-later" tool, a debit card draws funds from your bank account.
Since your purchase is automatically deducted from your bank account, make sure you have the money available now to cover what you buy .
Credit Cards.
Study your card agreement
Note the grace period, annual fees, cash advance fees, finance charges, and annual percentage rate (APR). If you intend to carry a balance on your account, look for a lower APR, even if it means paying a higher annual fee.
Use credit wisely
Keep track of your current purchases. Avoid large impulse purchases. Don’t use a cash advance to cover normal daily expenses. Remember the 20/10 rule: never borrow more than 20% of your annual net income; and never let your monthly debt payments become more than 10% of your monthly net income.
Know your limit
Exceeding your credit limit is considered a violation of your account agreement and may result in additional fees or penalties, or the freezing or cancellation of your account.
Pay off your balance within the grace period
For most cards, you can avoid finance charges by paying off your total balance within an established grace period. It’s like an interest-free loan for up to thirty days.
Make more than the minimum payment
If you can not pay off your total balance each month, then at least try to pay more than the minimum required.
Pay on time
Be sure to get your payment in before the due date to avoid a late fee and possible credit damage.
Keep in touch
If you change your name or address, notify your lending institution immediately. You don’t want to risk a late payment. Also contact your lender if you cannot make a payment on your account for any reason. They might be able to arrange special payment options that help you avoid credit problems.
Remember: credit counts for loans
Financial institutions evaluate you based on the “3 Cs“...
Character - credit history;
Capital - assets that can be used as collateral; and
Capacity - your ability to handle the added debt based on your current income, debt, and expenses.
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