A Credit Card is nothing but a plastic card which allows you to but things that you need, now and pay for them later. This is why they are so popular. However, you just cannot go out there and start shopping with the credit card with out any limit. You have something called as the credit limit. You can make purchases using your credit card only till you reach your credit limit.

The credit card companies will charge you interest on the credit balance that you have with the card. So, as long as you pay those interests properly and on time and also you do not reach your limit, every thing is fine.

But it is always better for you to have a proper understanding about the technicalities of the credit card. Below are few of the most frequently asked questions regarding the basics of the card.

1)    What is interest?

It is nothing but money that you have to pay to your creditors for the money that they have given you.

2)    What are these percentages and “interest rates”?

“Interest Rate” determines how much extra money you have got to pay to the credit card company for the credit that you availed from them. It is a percentage relating with the outstanding balance that you have. It is mostly called as the Annual Percentage Rate or APR. The lesser the rate, the lower the interest you have to pay.

3)    Why should any body choose to use credit card that has a high APR?

Most people do not make such a choice. It is the bank that decides the interest rate based on your credit report. If you pose higher risk then you will have to pay a high interest rate and vice versa. This is why having a good credit report is very important.

One reason why people themselves choose a card charging high interest rates is because such cards offer privileges or rewards which will benefit the holder. Therefore, these special perks will cancel out the effect of the high interest rates. However, this is not suitable for most of the people.


4)    What is “Outstanding Balance”?

It is the total amount owed by you to the credit card company. It includes the money that you actually spent and also, the interest that is charged by the credit card company for what you spent.

5)    If I pay the thing called as “Minimum Payment”, then is I ok?

That something, is the lowest payment which you have to make to the credit card company towards your credit balance. It varies every month as it depends on your credit balance. Paying just the minimum balance is legally fine but habitually very dangerous. Most part of the payment will go towards the interest and therefore, your credit balance will decrease only very lightly. Therefore, try to pay much more than the minimum payment or even better, pay your entire credit balance and become debt free.

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.