The Digg Effect

If you are a frequent shopper then there must have been at least one occasion where you’ve stood behind someone in line at the store and watched him shuffle through a stack of credit cards. With the wide availability of credit cards these days, the majority of U.S. citizens have at least one credit card and usually three-four credit cards.

If you go by credit cards history, the use of credit cards finds its origin in the United States during the 1920s, when individual companies, such as oil companies and hotel chains, began issuing them to customers for purchases made at those businesses. After World War II, there was significant increase in the usage of credit cards. The first credit card, which could be used at a variety of businesses and store locations was launched by Diners Club in 1950. The credit-card company charged cardholders an annual fee and billed them on a monthly or yearly basis. Another major universal card, the “Don’t leave home without it” one, was introduced in 1958 by American Express Company.

Nowadays, there are a plethora of credit cards available and the consumer has several to choose from. Because of increasing competition in the credit card industry, credit card providers often keep coming up with new discounts and promotions offering incentives such as gift certificates, frequent flier miles, or cash back (based on total purchases made) to try to attract as many customers to their program as they can. These days, low interest credit cards or even 0% interest credit cards are available. The period of low interest credit cards is limited to a fixed term, usually between 6 to 12 months after which a higher rate is charged. However, further services are available which alert credit card holders when their low interest period is due to expire. Such services charge a monthly or annual fee. There are a lot of credit card offers depending on your credit ratings as well.

The credit card may simply serve as a form of revolving credit, or it may offer multiple balance segments each at a different interest rate. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and the interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card. As the rates and terms of each card vary, services are available which allow users to calculate savings available by switching cards, which can be considerable if there is a large outstanding balance.

Credit cards have become important sources of identification too. If you need to rent a car, you’d need a major credit card. And if you use it wisely, a credit card can provide great convenience and allow you to make purchases with about a month to pay for them before any finance charges kick in.

This sounds good but in reality, many consumers are unable to take advantage of such benefits because they carry a balance on their credit card from month to month, paying finance charges on that balance. And since, it’s just plastic money, many find it hard to resist themselves for impulse purchases or buying things, which they actually cannot afford.

So all the benefits offered by the financial institutions are linked to your credit score. But what if you fall in the group of people with a bad credit or no credit? There might have been situations in your life, which have caused your credit to go bad. You are looking to improve your credit score to get better refinance deals or to get lower interest rates. Getting a credit card may help but to find a credit card with bad credit might not be easy. However, with the competition in the market, there are credit cards available even for someone with a bad or no credit. Just keeping in mind that you have poor credit score, you need to find credit cards suitable for you. Look closely at all offers available, do a comparison among all and do not forget to read the fine print. The fine print will help you with everything you need to know about balance transfers, fees, penalties, early payoffs, interest rates, and cash advances. You should know the maximum details about a card before you sign up for a card best suited for you. If you are unsure about some conditions, it is better to ask. Each company offers a customer service line that will be more than happy to help you with anything you might need in understanding their services.
Find out about all the penalties you would’ve to pay and any additional fees since you’ll need to keep your overall credit limit in check. Remember to pay all your bills on time and if possible a bit early so as to raise your credit score and an improved credit score would help you in your big item purchases. Using your credit card with bad credit should be done with responsibility, else it could land you in further bad credit.

You have to realize that the companies who offer credit cards to those with no credit or bad credit are getting some value in return. It might be a higher fees for certain items or possibly higher interest rates. Don’t let that intimidate you though. If you use your card responsibly, that responsible credit card usage can not only help to build your credit, but it can provide other benefits too like refinancing or when you need to purchase a home.

For more information, resources and to signup for a card suitable for you, visit this credit cards website for help.