Credit Cards - A Short Guide to help you through the Credit Card maze

Selecting Your Credit Card

Todays Credit card market is immense, and finding the most advantageous deal can be very confusing. Your starting point should be to determine the factors of the different types of deals on offer in todays market place and how these might be of benefit to your lifestyle. There are many benefits on offer due to the competitiveness of the overcrowded credit card market, this means more choices for you the consumer!

So . . . where to start?? The main factors for you to consider are:

1. The interest rate (APR)
2. Balance Transfer Rates ( usually 0% for a set time period )
3. Charges ( i.e. annual fee and cash withdrawal fees at home and abroad )
4. Loyalty rewards
5. Free Services

If you are in a position to settle your bills within the interest-free period ( usually 1 month ) then look for the best reward cards offering cashbacks, air miles and other frees services such as travel and travel accident insurance.
If you intend carry over the credit card debt from one month to the next then look at selecting cards with the lowest interest rates and temporary 0% on purchases. You should also consider switching to another credit card with a balance transfer offer.
Those of you who have large outlays with outstanding balances should go for cards with 0% on balance transfers Balance Transfers best buys

About Credit Cards

A credit card provides you with a most convenient, unsecured amount of credit. You can either settle the account in full and without interest during a fixed period from the billing date, or pay off an amount of the loan and carry the balance forward with interest, within your specified credit limit.

Who is involved in a credit card transaction:

You - The Cardholder

The cardholder's card is swiped through the merchant's point of sale terminal, which then transmits the information stored on a magnetic strip or a chip to the acquiring bank in encrypted form. The acquirer checks the merchant's ID, the card number, the expiry date, the credit limit and the remaining credit.

'Issuing Bank' - issues the card then advances the line of credit

The merchant – The Retailer.

The acquiring bank connects to the issuing bank via the network's computer. The issuing bank transmits the account information and then later transfers the funds to the acquiring bank. The issuing bank debits the cardholder's account and reduces the balance of credit available.

'Network' (e.g. MasterCard or Visa ) - a co-operative between the affiliated card issuers and the network links the issuing and acquiring banks and co-ordinates the exchange of information and the flow of funds.

The network charges the issuing banks to cover its costs. The acquiring banks charge the merchants a percentage of each transaction and pay interchange fees to the issuing banks. The issuing banks charge cardholders interest on unpaid balances, and they aslo sometimes charge an annual fee.

Types of Credit Card

• Credit Repair Cards...for those with a less than perfect credit rating. This can be used to help rebuild your credit rating.
• Standard cards...these are relatively easy to obtain in terms of minimum age at application, income and credit history.
• Gold and Platinum cards...for those with credit histories and above-average incomes. These cards have higher credit limits and usually offer freebies like travel accident insurance.

There is however a lot of inconsistency and distinctions between the different credit cards are often cosmetic.