3. Why I Need a Credit Card

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The United States has a well-developed economic structure. Banks are in the business of lending money, holding savings, helping buy homes, and providing credit to those who are qualified. A credit card can be a useful tool if used wisely. It gives people a sense of freedom by giving them the power to purchase products without cash. Basically, credit card use is a bank loan that the user promises to pay back with interest. Credit card transactions are common in the United States.

To acquire a credit card, you can visit a bank, or go online to find banks offering cards. Banks base their interest rate on a person's credit history and assets. The better your credit history, the better position you will be in to get the best credit card interest rate. Interest rates vary greatly. Some can be as high as 20 to 25 percent, while others are well under 10 percent.

When a person first applies for a credit card with little or no credit history, the interest rate will not be as low as it is for a person who has a well-established credit history. However, don't become discouraged. Everyone has to start somewhere. A new credit card holder will probably be limited to a $500 credit line. This is a figure that many banks use for new credit card customers. This limit is in place until the cardholder shows that he or she is a responsible person by making the monthly payments on time. If the credit card payment is due on the 25th day of each month, it will be a good idea to pay it a day or two before that date. With that done, the credit line will increase giving the user more freedom to use his or her card.

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