Everything You Should Know About Bank Credit Cards
When used responsibly, a credit card can be an asset to your financial standing. Credit cards are available to anyone no matter what your credit level, however those with less than perfect credit will find it more difficult to obtain a credit card. Credit cards should be reserved for emergencies or use on items you regularly purchase and budget for such as groceries and gas. Maintaining good standing with a lender will allow you to apply for other forms of credit in the future and enjoy lower interest rates.
Bank credit cards are often overlooked by consumers. Once a person turns 18 years of age they are bombarded with offers for different credit cards from all the major lenders and stores. As the applications build up and the acceptance letters fill your mailbox, you will find yourself with a large number of credit cards simply based on your addiction to hearing “yes.” Bank credit cards differ from other credit cards for several reasons. First, a bank credit card functions the same as a traditional credit card, but is entrusted to you by your financial institution. Many consumers choose a card from their lender when they have been a member for several years. You will find that banks are more apt to overlook less than perfect credit scores if you have remained in good standing with them for a long period of time. A bank will stand behind their patrons and work with you through a tough situation such as job loss when it comes to your credit card.
Bank Credit Cards Have a Lower Interest Rate
Bank credit cards typically have a lower interest rate that averages 4% to 6% versus the average of 11% to 13% with non-bank credit cards. Additionally, with bank credit cards you are able to make payments directly at your financial institution instead of utilizing the internet, phone or mail payment systems. Based on your banking history, your financial institution is more likely to give you a higher credit limit as well and will allow you to apply loans to your bank credit card. When you take out a loan and use it on your credit card to increase the credit limit you will be able to redeem the additional bonuses your bank offers for spending from your loan purchases. The perks may be appealing for regular credit cards, such as cash back and frequent flyer programs, however there are better perks available through financial institutions. Because a bank is endorsing their patrons for the credit card, the card company (MasterCard or Visa typically) is more apt to offer a larger line of credit and additional incentives for using their card. Finally, when you use a bank credit card you are supporting your bank. Every time a credit card is used a small fee is charged to the merchant that is paid to the founder of the card. Using a bank credit card allows you to support your financial institution in their growth and future expansions.