Credit Card Facts

Credit cards can be a dream way to purchase items or the cards can become your worst nightmare when you are drowning in debt. Choosing the right credit cards and managing your credit card spending is the key to keeping it a dream way to make your purchases.

Difficulty: Moderate

Instructions

1. Understand the interest rate. When choosing a credit card or evaluating a card you already have, the first fact you need to know is what the interest rate is. Credit card interest rates can range from introductory rates of 0% up to 23%, depending on the card issuer and your credit. This is the rate that your interest payment is figured from. So, if you plan on carrying a balance, it is important to know how much you'll be charged for doing so.

2. Keep track of the due date. The second fact you should know is the billing cycle and due date of your credit card bill. It is important to pay your credit card bill on time to keep your credit score up and your credit history neat and clean. Knowing your billing cycle also helps if you are going to make a big purchase. If you make the purchase when one billing cycle ends and when the other one begins, you can buy yourself almost two months before the purchase amount is due (or starts accruing interest).

3. Remember the annual fee. Generally speaking, it is not worth it to have a credit card that requires you to pay an annual fee to have it. If you have good credit then you can find plenty of credit cards that do not charge an annual fee. If you have bad credit or are trying to reestablish credit, then getting an annual fee credit card may be the only way you can have a credit card, but once you have brought your credit score up inquire about removing the annual fee or find another card you can qualify for without paying an annual fee.

4. Avoid late fees. If you pay your bill late or do not pay at least your minimum balance, not only will you be charged interest on the balance, but you will also be charged a late fee. This fees can run $20 to $50 for even being one day late, so be sure to know your due date and make at least a minimum payment by this date.

5. Learn about cash advance fees. You should try to avoid using the cash advance feature on your credit card because the interest rate is usually very high. In an emergency situation, having a cash advance feature is nice, but be sure to pay the balance back as soon as possible to avoid paying additional interest on your balance.

Tips & Warnings

• Beware of low introductory rates. These low interest rates only last for a specified period of time. As long as you plan on paying off your balance before the intro rate turns into the regular rate, then you're fine. Intro rates that start out at 0% to 3% can easily turn into 23% once the intro period expires.

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[AnneZ]

on 5/17/2009 Everybody needs to be aware of their credit card info! Helpful and informative article. 5* and a REC.

[aupoet]

on 1/16/2009 Some good facts and common sense. Well written