Credit Cards

Managing Credit Card Use from RethinkingDebt

Credit cards, in the form of preferred customer cards, were in use as early as the 1880's in the United States. Businesses issued them to their regular clientele with the hope of increasing sales. In 1950, the Diner's Club was the first to issue a card that could be used in a variety of establishments. Since then, credit cards have become extremely popular with businesses and consumers. At the end of 2008, the typical American adult had an average of 5 credit cards.

Credit Card Basics

There are different types of credit cards. The following is a summary of each one.

Revolving, unsecured credit card

Revolving cards are cards where the balance does not have to be paid in full within 30 days. Unsecured means that you do not have anything held as collateral against any purchases you make on this card. An example of a revolving, unsecured credit card is Visa, MasterCard and department store credit cards.

Not revolving, unsecured credit card

Not revolving generally means the balance is due every 30 days. Examples include Gas cards, American Express, and Diner's Club. These cards usually offer a grace period with no interest.

Secured credit cards

These cards require you to deposit an amount of money into a savings account at the bank as collateral. If you don't make the agreed payments, the bank has the right to take the funds you have deposited as collateral.

All credit cards have costs associated with them: interest fees, annual fees, cash advancement fees, transaction fees, late fees, and over-limit fees. Keep this in mind when weighing the convenience and benefits of credit.

Debit Cards

These cards are issued to your bank. They allow you to obtain cash from your account 24hrs a day, 7 days a week. As you purchase things using your debit card, the money comes directly from your bank account.

If you have unmanageable credit card debt, contact us to see how we may be able to help.

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