Credit Cards Online Information

In the fast-paced, retail-giant ruled world of today, credit cards have become a common accessory around the whole globe, with most people claiming that they cannot imagine surviving without a number of cards in their wallet. As acquiring credit cards becomes easier, the world seems to be running solely on credit, with most people spending more money then they really possess, and then suffering the backlash if they are unable to repay the loan.

When we spend money using a credit card, it’s not money in our possession but is what we borrow from the credit card company on the premise of repayment by the end of the month; which is why this spending is classified as a loan. Credit card loans also come in the form of cash when we use the cards to withdraw money from ATM's.

At the end of the month, credit card users are sent a bill which they are supposed to pay before the due date. The bill represents the money that has been spent during the month, along with service charges and interest rates, which vary according to the terms and credit card providers. If you pay before the due date, the charges are often nominal, and the whole system proves to be quite beneficial; if the loan isn’t returned on time, there are serious consequences. Astronomical late fees and interest rates are charged on the amount, which increase as time passes; and your credit report may also get a few red marks which affects your chances of acquiring future loans.

Most credit cards loans are unsecured, which means no collateral is offered by the borrower. This makes it much easier to obtain a credit card - especially if you have a clean credit history - and allows people with no valued property to also spend using a line of credit. The reason why credit cards loans often have very high fees upon non-payment is because the loans are not secure, and thus the company cannot legally seize any of the borrower’s belongings. Unsecured loans also mean that if you have a bad credit score, or your background doesn’t check out, it’s very difficult to obtain credit cards since every company requires confirmation that they are dealing with a borrower who will be able to reimburse the amount spent. Just like the amount lent depends on the value of the collateral offered in secured loans; the terms of an unsecured loan are based on a borrower’s credit history.

With the growth of competition, credit card companies have also cashed into what people call the 'loan sharking' business. Since most credit card loans are unsecured, the companies have the power to slap any late charges they wish and increase the interest rates. Credit loan sharks also operate using the ‘Universal Default’ provision, which runs on the principle that if a borrower is late in paying another creditor altogether, the introductory rates offered to the borrower may also sky rocket. The unsettling part is that these companies aren’t even breaking the law, but in fact seem to be penning them.

# posted by Medical Information : 2:22 AM