Credit

Even the most disciplined savers find themselves in need of credit at some point. An informed decision made by a knowledgeable consumer can be an excellent financial investment. When a consumer obtains a loan, they are actually helping boost the economy; the process of lending and borrowing is what fuels the financial industry. The key to credit is avoiding the trap of payday loans and high interest credit cards. A wise consumer is an informed one, knowing about the different types of credit available will help you make a sound financial decision.

If you've ever heard someone say "the world is going plastic" believe it. Each year the financial market is flooded with consumers using credit cards to purchase everything from cars to groceries and gas. The offers are everywhere and geared for everyone. For some, credit cards offer buying security and convenience but for others, they've become a major source of financial ruin. Finding the right card to suit your needs is crucial. Knowing about the different types of cards available will help you make a sound financial decision.

Debit Cards

Perhaps the most common form of plastic, these cards are issued by the bank you have a checking account with. Although these cards act like a credit card, the funds are actually deducted from the available balance in your checking account. Debit card transactions are not reported to the credit bureaus; however, it is important to use them responsibly to avoid insufficient fund charges imposed by your bank.

Low Interest Rate Cards These cards are ideal for people who generally carry a large revolving balance. While these cards tend to have fewer perks than reward cards but can save a person a substantial amount of money on finance charges.

Cash Reward Cards

These cards work great for people who don't plan on keeping a large revolving balance. Because the rewards are based on the total purchases made, these cards entice buyers to use their cards for all purchases no matter how big or small. Some companies apply the cash back rewards to the cardholder's statement while other companies issue a check annually.

Affinity Cards

Affinity cards are typically held by people belonging to an association or those who use air travel frequently. These cards are sponsored by professional organizations, alumni associations and some travel organizations. Usually a portion of the fees and charges accrued are donated to the sponsoring organization.

Business Cards

Many people who own or manage a business frequently use credit cards to make business related purchases. For many people the use of credit cards is an excellent way to keep track of expenses and enjoy perks such as discounts on various business related services and products.

Secured and Unsecured Cards

Designed for people with bad credit or no credit, these cards often carry extremely high interest rates, steep finance charges and annual fees. Applicants for secured credit cards are required to put up a deposit on their credit line; this amount can range from 300.00 - 500.00 dollars. These types of cards can be helpful to someone trying to establish or reestablish their credit but in most cases should be avoided.

When considering applying for a credit card, don't be overly anxious and end up making a bad financial decision. Be an informed consumer and be prepared to walk away from a bad offer no matter how tempting. Read the fine print to make sure you are aware of any hidden fees charges.

No matter what your financial position, don't limit yourself; explore all options available to you no matter what you think your chances of approval might be. Check out the rates at local banks and credit unions. Research the possibility of applying for government approved housing loans; these loans are made at excellent fixed interest rates and are perfect for the first time homeowner.

Avoid the trap of payday loans by setting up a budget and making informed financial decisions. Invest in your future by exploring and practicing ways in which you can make your money grow by saving and investing. It is never too late to start over but it takes diligence, hard work and the ability to say "NO" to risky financial traps such as payday loans.