Morgan Stanley credit card
 
 

Credit Card Offers - How Credit Cards Work

Credit cards are used to borrow money to purchase goods immediately and then pay back this money in a way to suit an individuals preferences. Credit card companies will send you a monthly statement showing your purchases and how much money you owe the credit card company.

  

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You can choose to repay the whole amount back straightway or pay a part of it. If you pay the whole amount you will probably not be charged any interest but if you only pay a part you will then be charged interest on the withstanding balance.
Credit cards can also be used to withdraw cash but a fee is usually charged for this service. Having a credit card is useful because if you do not have finances available at certain times you can borrow and pay back a month later or in parts. Credit cards are also especially useful for internet shopping as they can offer you online protection , find out more here.
When considering what credit card to buy it is important to decide how you will pay for your purchases. If you will be only paying part of the balance off it would be in your interests to find a credit card with a low APR. If the APR is low this means you will be paying less interest on your outstanding balances. However, if you prefer to pay off your balances in full at the end of each month you would be better off finding a card with other added benefits such as cash back, loyalty schemes or charity donations.
The APR can be fixed or variable. 70% of all credit cards have a variable APR, meaning that the interest rate fluctuates with an index (usually The Wall Street Journal Prime Rate is used as an index). This can change each quarter or even each month. A fixed APR means that the rate does not change each month or quarter, however it can change, as ‘fixed’ does not mean fixed forever. However, law says that credit card issuers have to give customers notice of any rate increase.
If you do not pay the minimum amount off on your statement each month or if you miss a payment your credit card company will penalise you. They can also issue a penalty if you go over your credit card limit. These penalties can sometimes be quite severe so it is important that you make sure you pay off your balances on time and keep within your credit limit. Also make sure you know how much the penalty is; this can act as a good deterrent to keep you on top of your finances!

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