When used responsibly, a credit card can help you build a good credit history, allowing you to get loans at favourable interest rates. Credit cards can help you make some purchases and protect those purchases in case of theft or damage. Simply put, a credit card can be a lot more useful than your debit card if you use it the right way.
Aside from credit-building, credit cards have many other perks. Outside Nigeria, many credit cards offer cash or travel rewards. Some cards have shopping or travel benefits that will save you money, like purchase protection, price protection, extended warranty, rental car insurance and more. Some cards have zero per cent interest on purchases or balance transfers for 12 to 18 months. When you get a credit card, check your benefits statement for details.
Banks take on more risk when they approve unsecured cards. Because of this, those without credit history generally need to start with a secured card, or get an unsecured card with a co-signer. Alternatively, you can ask to be added to a relative or friend’s credit account as an authorised user. As an authorised user, you’ll be able to use a credit card and will likely benefit from the primary cardholder’s good credit habits, but you won’t be legally obligated to pay the balance.
Keep in mind, if you take a cash advance, you may have to pay a higher interest rate and you won’t have the benefit of a grace period. You may also have to pay an increased penalty interest rate if you make a late payment or spend more than your credit limit. You’ll be able to find these alternative rates on your card issuer’s website.A minimum payment is the smallest amount of money you can pay each month without damaging your payment history and incurring a late payment fee.
EMV chips have two major card verification methods: chip-and-signature and chip-and-PIN. Chip-and-PIN is the most common in Nigeria. Chip-and-signature cards are most popular in the United States, while chip-and-PIN cards are more popular in Europe.