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ARTICLE:1
ORIGIN
Credit
cards origin is so far unknown but it is
believed to
be born more than 100yrs ago. But some say that
the
use
of
credit cards originated in the United States
during
the
1920s.Some small retail merchants, hotel chains
and
oil
companies banded together and began issuing
them to
customers for
purchases made at those
businesses.
This
use
increased significantly after World War II.
This
merchant
association gradually turned into larger
associations
with
the advent of computerization.
DEFINITION
It is important to understand what a credit
card
means?
A
credit card is a thin plastic card, usually 3-
1/8
inches by
2-1/8 inches in size and contains
identification
information such as a signature or picture of
the
person
whom it is issued to, and authorizes the person
to
charge
purchases or services to his account -- charges
for
which
he will be billed periodically. These cards are
designed
such that the information on the card is read
by
automated
teller machines (ATMs), store readers, bank and
computers.
AMERICAN USAGE
Experts say that the majority of U.S. citizens
have
at
least one credit card -- and usually two or
three.
It's
true that credit cards have become important
sources of
identification for example -- if you want to
rent a
car,
you really need a major credit card. And used
wisely, a
credit card can provide convenience and allow
you
to
make
purchases with nearly a
month to pay for them
before
finance charges kick in.
A DEADLY TRAP
Although it sounds good theoretically. But in
reality,
many
consumers are unable to take advantage of these
benefits
because they carry a
balance on their credit
card
from
month to month, paying finance charges that can
go
up
to a
whopping 23 percent. Many find it hard to
resist
using
the
old "plastic" for impulse purchases or buying
things
they
really can't afford. The numbers are striking:
In
1999,
American consumers charged about $1.2 trillion
on
their
general-purpose credit cards.
Even if you make your credit card payments on
time,
the
credit card bank can raise your interest
rate automatically
if you're late on payments elsewhere -- such as
on
another
credit card or on a phone, car, or house
payment --
or
simply because the bank feels you have taken on
too
much
debt. There is no limit on the amount a credit
card
company
can charge a cardholder for being even an hour
late
with a
payment.
Many Americans are inattentive about their
credit
card
accounts. Approximately 35 million Americans
pay
only
the
required minimum -- as low as 2 percent -- of
their
balance
each month. Sticking to that rate, it could
take
years
to
clear their
debt and they'll end up paying far
more
than
the cost of the items or services they bought.
However, many of these 35 million cardholders
could
pay
more than the minimum, and could possibly even
pay
off
in
full their balance some months. But they don't -
-
even
though the interest rate they are paying on
their
credit
card balance is considerably higher than what
they
pay
on
other things and compared to what they're
getting
in
interest income from their savings account. Is
this "financial illiteracy," or just human
beings' "irrational behavior?"
Getting Rid of Debt
Always be aware of all of the fees that may be
associated
with your credit card. (That means not tossing
out
the
fine-
print s that come in your bill
periodically!)
Know
the annual fees, current interest rates,
finance
charges,
cash-advance fees and any other fees tied in
with
your
card. This knowledge can help you make better
decisions
on
how to manage your card.
Cash advances can be trouble! You should only
get
cash
advances when it is absolutely necessary.
Higher
interest
rates (than you're paying for card purchases)
are
usually
charged, and most banks also charge a service
fee
related
to how much cash you're withdrawing. (The same
applies
to
those handy, personalized "checks" the credit-
card
company
sends you!)
Always be on the look-out for cards that offer
lower
interest rates. Transferring balances from one
card
to
another to take advantage of low introductory
rates
is
a
common practice among U.S. cardholders. Low
introductory
rates can be very helpful in your quest to
become
free
of
credit-card debt. You should look for credit
cards
that
offer a low intro rate (usually for six
months),
and
transfer the balance from your previous credit
card
to
that
credit card. Before you take this step,
however,
make
sure
that, after the intro rate has expired, the new
card
offers
the same (or lower) interest rate as your
current
card.
Experts say that making minimum payments is one
of
the
most
common mistakes consumers make. You will save
lots
of
money
on interest and get to debt-free goals sooner
if
you
pay
more than what is required each month.
More abstracts about the CREDIT CARDS: HELP OR TRAP