You want to get a credit card and it is your first, so what all do you need to know about credit cards. First you must be approved for a credit card, this can be challenging in and off itself. But if you are approved the one feature you should be most concerned about is your interest rate on your credit card.
An interest rate can be fixed or variable, and the term fixed is a bit misleading. A fixed credit card interest rate can change, but they have to notify you in advanced about the change. Thus if you wish not to deal with the change you may pay off your balance and close the card. A variable interest rate is one that can change without the company notifying you in advanced.
There are other interest rates that can apply, not just the standard purchase or balance interest rate. One would be a balance transfer interest rate, this is a rate that is applied to any balance transferred from another credit card and is typically low. The balance transfer interest rate can change after six month, this is known as the introductory rate. But by law the introductory rate has to be applicable for at least six months.
Another interest rate that you may run into is the cash advanced interest rate. The interest rate on cash advances is typically the highest interest rate that will apply to any of your credit card features. This is when you go to an ATM and use your credit card to withdrawal cash. There is usually no grace period for a cash advanced, thus the interest starts to build on the withdrawal immediately.
Your interest rate does not have to be the same as another person who receives a credit card of the same type at the same time as you. Your interest rate is dependent on your credit history, thus depending on how good or bad your credit history is will determine your interest rate. Typically the better you credit history the lower your interest rate, and the opposite is true of a bad credit history.
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