Credit and Debt Management-Economics (Essay Sample)

Credit and Debt Management-Economics Student name Institutional affiliation Course Instructor name Due date Credit and Debt Management-Economics A credit card constitutes a flexible, slim, rectangular object made of plastic or metal that is issued by a bank or financial services organization, which allows users to borrow from them in exchange for which cardholders are supposed to pay for purchases in the shops and businesses that accept cards for payment. On the other hand, with credit cards, the restriction applies that the cardholder shall return the money plus any applicable expenses, either by the due date or in a pinch, and the terms and conditions of the loan determine the default. The credit card issuer has a cash line of credit, which can be provided to its cardholders entirely separately. With this arrangement, the money can be taken in the form of cash advances obtained from the institution's ATMs, foreign branches, and credit card convenience checks. For instance, these money advances often have different terms, with no grace period, and yet attract higher rates, which most certainly deviate from the ones that utilized the principal credit line. The market usually has a fixed ceiling derived from issuers' credit ratings. Consumer sales have drastically diversified as a vast number of businesses adopt methods for accepting credit cards as one of the most preferred payment modes for the purchase of goods and services worldwide. Demanding is a rather laborious decision, requiring the analysis of many essential factors, such as credit limit, grace period, rewards and APR, customer service, selectivity, and other expenses. In this article, we consider three types of credit cards: The various categories of credit cards include; Rewards cards, Low-interest cards with a transfer feature, and Credit-building cards. Rewards Credit Cards Rewards credit cards typically offer cash back, points, or travel miles for every dollar you spend (Wix et al.,2023). Incessantly get their cup of tea due to rewards schemes like cashback, travel rewards, and other rewards for purchases. Those limits are often increased above what a traditional lender would provide to meet specific spending habits. The grace period for payments is subject to changes, but it will likely be anywhere between 21 to 25 days. Nevertheless, this kind of card also gives rise to higher APRs that can discourage people from utilizing them to carry balances. Issuers' quality of customer service tends to be different, but many of them will still help you with your rewards cards' issues. Periodic fees and additional expenses may be involved for the functionality of some card features. Low-Interest and Balance Transfer Cards It is an ideal option for anyone who wishes to reduce extra charges on debts or, in some way, combine existing debt. It provides the best APR compared to other offers, with sometimes 0% for the first term. Credit limits differ based on the borrower's creditworthiness but are smaller than rewards cards because they are directed toward affordability (Kasaian,2021). The constructed period is analogous to other forms of the card, and it allows balances without calculation of interest. Quality of customer service is a crucial point, especially when it comes to balance transfers; timely execution has to be perfect. The extras will include costs for balance transaction fees and annual fees only if it is not a special offer that is free from annual fees. Credit-building Cards It works for individuals who need to be more adequate or have a bad credit history to have their goal of getting better credit. They have smaller initiating credit limitations, usually between around $200 and $500. A grace period that shows that there will be no interest charges while payment for the bills is being made on time (Lehner, (2023). Cons will also be in excess, merely on increasing the credit scores, while discounts and other bonuses will...