There is no denying the fact that finance indeed plays a crucial part in our life. From paying out the utility bills to purchasing a new car, money is the sole factor required in all these aspects.
People come across various financial situations when they don’t have enough cash in hand. These could be anything from minor to extreme circumstances.
For this, people often keep credit cards in their pocket, which help them to make the payment of everything that they purchase.
Having credit cards provide tons of benefits to the user, including:
- Carrying them are safer than cash
- Helps in boosting your credit score
- Gets several bonuses and cash backs
- enjoy promotion period of zero interest
- Travelling rewards
The list of benefits goes on and on. But, you can reap the maximum benefits only when used correctly.
Before you make your mind to get one card for yourself, you must have a complete idea of the credit cards system.
And, if you don’t, then you will know by the end of this blog. So, let us get started.
How do credit cards work?
A credit card is a financial tool that allows the user to pay for anything that they purchase either online or offline market.
So, this is same as the debit card where you have to swipe them for the payment, but the difference here is that you don’t owe the money that you will be using.
At various occasions, credit cards can prove to be very handy, but misusing the cards can also have a severe impact on your finance.
Now, coming to the functionality of credit cards, you will borrow the money from the provider and will make the repayment either in full or every month.
If you go for the option of paying in instalment, then there will be a certain amount of interest included as well.
The best is to make the repayment in full so that you clear your debt instantly. Also, you will not be charged with any interest.
Each card user can spend a maximum of a fixed amount that is also known as a credit limit. The limit given by the card provider will vary from person to person and even the credit card agency.
What is the maximum number of Credit Cards Can I Hold?
If you are card user or planning to get one, there might be a familiar doubt in your mind, i.e. what is the maximum number of cards one can use.
Well, there is nothing like maximum or minimum when it comes to credit cards. One can use as many cards as possible as per his/her affordability and the credit score permits.
In the UK the average number of credit cards is one or two. Having too many cards could impact your credit score, and you might get under the burden of high debt.
Missing the payment means paying late fees and an increase in the interest rate that can be very difficult to manage.
Another doubt could come into your mind that if “I can’t pay my credit cards what will happen”.
Now, if this happens, the last resort for you will be to go for debt consolidation loans to make the payment. Hence, the best advice is to use the number of cards that you can manage to handle.
Factors to consider when getting a credit card
Thus, having a credit card can be a bane or boon that depends on how you use it. Here, we have mentioned significant factors that you must consider when applying for the card:
Know your spending habits
The first thing that you need to check is to analyse your spending habits. If you are the type of person who rushes to the mall after seeing the SALE banner, then you might need to think again of getting a credit card.
There will always be a chance that you would encounter tempting offer which you might not resist. And, with no cash in pocket, you will end up swiping your credit card.
Thus, this kind of use of cards will eventually affect you profoundly, and you will find yourself in the trap of debt.
Hence, make sure that if you are planning to buy credit card, then take it out for specific use or during the case of emergencies.
Research the market thoroughly
A card is just a tool, but it is the agency that will be providing the service. Therefore, you must research the market thoroughly to find the right company who can offer you the best offers.
The interest rate will decide how much you will have to pay after using the card so ensure that you are getting the most affordable interest rate with your card.
Ching your credit limit
The credit limit is the maximum amount of money that you can avail on your card. This limit can range between hundreds of pounds to thousands of pounds depending on your financial circumstances.
Now, you will probably don’t want to face the situation where the card issued to you get maxed out now and then.
It will affect your credit score drastically, and you might face a lot of difficulty in availing financial product in the future. Therefore, make sure that you get enough credit limits that you can manage.
Know about the reward programme
One of the primary reasons why people opt for credit cards is the rewards that come with them.
The more you use your credit card, the higher will be the points that you will earn. At the same time, ensure that you don’t exhaust the credit card’s limit. Check all the features that the credit card agency will likely to offer such as:
- Travel rewards
So, this was everything that you need to know about credit card and the factors you need to keep in mind while availing it.
To make the most of this financial tool, it is necessary to have complete knowledge of cards.
Description: If you are planning to apply for credit cards in the UK and India then make sure that you are well aware of how it works and what the benefits you will get from using it are.
Contributors:- “Jasmine Watson” From “EasyCheapLoans” one of the Famous loan lending agency in the UK.
A Special Thanks from Personal Loan Xpress Team.
I am Ram, I have completed Master of Commerce, I am Finance writer and Personal Loan Advisor in Personal Loan Xpress. I love to write finance articles and i consult the people regarding their financial decision with my Expertise.