Credit card applications – a few reasons you might want to consider an alternative

To begin with, let's go over the basic features of a credit card. A lot of credit cards on the market offer introductory period. However, this period only lasts for 6 to 12 months, after which you will be charged with interest on your balance. It is also called APR for purchases. But this is not the only rate you will face when dealing with credit cards.

If you think that withdrawing cash at the ATM using your credit card is a good idea, think twice. Read the terms and rules of your credit card applications carefully. You will be often provided with a table of APRs. Cash advance rate is the reason you should avoid withdrawing cash off your credit card.

For every cash withdrawing transaction that you make, a rate of more than 20 percent will be applied to the sum you take out of the ATM. In addition, some credit card issuers also charge a fee that is not related to the amount you withdraw. Making small withdrawals can actually cost you double the amount of cash you got on your hands.

A wise thing to do when craving for paper money is to use a debit or ATM card. Those have no or little fees once used at the money dispending machine. If for some reason you don't own such cards, your best bet is to withdraw cash at your bank, or any other bank for that matter. However, keep in mind, that other banks will often charge you a withdrawal fee.

In any case, if you find yourself in the middle of nowhere, with no signs of banking facilities, except ATMs and there is an emergency situation, go ahead and use that plastic credit of yours. But be wise when entering the desired sum. You don't want to end up paying cash advance fees twice.

The next item in the list is the default rate. This interest rate applies as soon as the bank sees you as a risky customer. Default rate is usually applied once you miss one or two payments. If you find yourself in an unpleasant situation like this, it's time to find out where you went wrong. Think of what caused you to miss a payment and avoid using your credit card until you pay the balance you owe in full.

The worst thing about default rates is that they are universal. In other words, once one card issuer imposes default rate on your plastic, the other issuer will do the same, even if you've never missed a payment. Therefore, if you find yourself paying the default rates, it is time to consider other sources of funds.

Last but not least reason to avoid using credit cards depends on your lifestyle. If you find yourself having trouble managing finances or have little knowledge about credit, you will most probably end up in deep debt. Impulse buyers should also stay away from plastic. A lot of people with credit cards tend to think that they have easy access to money on their credit cards. But that access comes at a cost of interests and fees.

If you feel that credit card is not your option, don't think that you will not be able to enjoy all the services that require plastic. There are tons of credit card applications for prepaid and secured cards. Such cards require deposit made that also represents your credit limit. So, be rational about choosing methods of payments and don't let credit debt eat out your savings.

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