A credit card is a revolving line of credit which allows customers to access a certain amount of credit and then repay it as agreed - usually within a 30 to 45 day period without having to pay interest on that purchase.
Once the grace period is over you will have to repay the outstanding balance plus interest. Since your credit card offers you a fast cash loan - you can essentially borrow money when you need it without having to pay interest on that amount up until a certain point. This means that as long as you have made the minimum payment required per given period you will be able to keep the interest free period running.
Credit cards allow you to buy expensive items like electronics and airline tickets and then pay these large purchases in installments which makes it more affordable for you.
Credit cards also enable holders to access a range of topnotch services, rewards and benefits such as fraud protection, free travel insurance, complimentary flights and reduced membership fees for a variety of different clubs and many more varieties. The best thing about having a credit card is that you can rent a car, hotel and access services which require a deposit to be retained without any hassle.
Using your Credit Card as a Safety Net
There's nothing worse than running out of money during a crisis or when you need to get something done. While many people may resort to using their savings or borrowing from family and friends those who do not have these options available to them may be tempted to take out a payday loan or other form of expensive debt.
With a credit card you can access a certain amount of cash immediately and, if the amount used is repaid within the grace period you have essentially borrowed without cost. This makes a credit card an ideal tool for those who have a decent income but have no savings or emergency cash fund to carry them in times of financial distress or cash shortages.
Where you Can Get a Credit Card
When discussing credit cards the first brands that come to most people's minds are American Express, Visa, MasterCard and Diners Club. These are international brands and are linked to all credit card providers in New Zealand.
This includes large corporate banks like ANZ, ASB, Kiwi Bank and BNZ as well as international brands like American Express and Diners club, as already mentioned and, even alternative credit providers like Gem Finance. Each of these lenders offers a range of credit cards from their low rate variety to the maximum reward cards and you are encouraged to select one that suits your lifestyle and needs simultaneously.
How to Choose a Credit Card
Choosing a credit card may seem daunting when you're faced with all the various options available on the market. This overwhelming range of possibilities can easily be tacked if you have a clear idea of what it is you want to do and gain from your credit card. For instance if you would like to make everyday purchases or expensive charges on your card and have every intention on repaying these sums on time - every time - you may want to consider a card that offers rewards for purchases.
Rewards cards are great for making purchases but, usually carry higher interest rates and, if you are not 100% certain that you will be able to repay the balance on time you should rather opt for a low rate card. Low rate credit cards may not offer a huge range of rewards and benefits but they allow you to use money up to your credit limit and incur a significantly lower interest charge on this amount than any other card.
If you have another credit card that is costing you heavily in interest you may want to get a balance transfer credit card which will allow you to transfer this debt onto your new card and save yourself from further interest charges.
Understanding 0% Interest and 0% Balance Transfer Cards
One of the biggest selling point for credit card providers is their 0% interest on purchases and 0% interest on balance transfers offers but, before you get caught up in all the hype it's important to understand what terms come along with the 0% interest periods.
For starters this 0% interest will only be valid for a set period of time - some providers offer it for 55 days while some may offer it for up to 6 months. Once this period is over any purchases or balance transfers made with the particular credit card will incur an interest charge as specified in your contract.
This interest can go up to hefty double digit figures in some cases, particularly in that of rewards cards. Although credit cards can be useful and in some cases a way to borrow money without any cost, they can cause problems if not repaid in full by the necessary dates. In the same manner if you transfer a balance onto a new balance transfer credit card and do not manage to repay this by the given date you will then be charged interest on the outstanding amount.
Qualifying for a Credit Card
Qualifying for a credit card is much harder than for many other forms of credit like personal loans, payday loans and so on. Apart from a good, clear credit history you are required to earn above the lenders set minima and be able to demonstrate that you are not over indebted and, in some cases provide the details of any assets you own.
Some provider may be slightly more lenient than others and may consider your application but, generally speaking you must have a clear credit history. In addition to the eligibility requirements as described above you must be 18 or over, be a citizen or permanent resident of New Zealand and be employed or self-employed on a permanent, full-time basis to apply for a credit card.