Credit Cards For Dummies: What You Need To Know

InterestRateTrapIf you’ve been thinking about getting a credit card, chances are that you understand how credit cards work. Using a credit card is a simple process. You simply swipe your card in lieu of paying with cash. At the end of the month, you’ll receive a bill with all of your charges. Sometimes, though, you might be a little surprised at the balance due. After all, it seems a little higher than it should be, right?

Many individuals who think that they’re ready for a credit card don’t understand exactly just how much interest can affect the total balance. Before you get your own card, there are a few things that you need to know.

    • First off, remember that interest can dramatically affect the amount of money that you owe.

If you only pay the “balance due” portion of your credit card statement, for example, you’ll probably never pay your credit card off. If you do manage to pay off the card, it will take you a long time. When you decide how much to pay each month, consider how much you’ll be paying in interest if you don’t pay the entire balance off.

    • Next, remember that interest is still something that you have to pay.

Some credit card users feel that interest is “ridiculous.” Unfortunately, though this might be true, you still have an obligation to pay off the interest. Before you make a purchase using your credit card, consider whether or not the interest is something that you’re willing to tackle. If you’re on a limited or fixed income, adding interest to your charges can end up being quite overwhelming.

Using credit cards does offer some perks. One of the benefits is that you’ll be able to make large purchases without having to save up for them first. Another benefit is that using a credit card on a regular basis can contribute to a better credit score.

No matter what you decide to do, remember that a credit card should be a useful tool. Should your credit card begin to consume your life or you begin to face overwhelming debt, it may be time to back off from using credit until you can get your balance under control.



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