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If you
are just entering the world of
credit cards,
there is important information you will need to
know in order to manage your credit and your
finances effectively. Establishing good habits
and a good credit history
now is the foundation for a solid financial
future. Applying for a credit card
in your own name can help you establish a sound
credit history
and will be a valuable asset in applying for a
loan for a home, new car, or getting a new job or
apartment. In addition, there is no safer way to
make purchases online or over the phone than with
a credit card.
Along
with the benefits of having credit cards, comes
added responsibility. If you misuse your credit
cards or fail to take responsibility for your
spending habits, you could end up in serious
financial trouble. Learning how to choose the
credit card that is right for you is your first
step. There are numerous credit card offers from
which to choose, and it can be confusing to know
which is the best one for you. Do not choose a
credit card simply because of a low introductory
rate or generous rewards. A low introductory rate
will increase sharply when the introductory period
is over, and many times these types of cards have
annual fees
and additional costs that are not made clear in
the initial offer.
Know the terms of your contract with the credit
card company. Interest rates and late fees can
cause your balance to rise considerably and making
the
minimum payments
will not help you pay off your credit card debt.
If you make a lot of purchases with your credit card,
it will be necessary for you to pay your entire
balance each month if you want to avoid additional
fees. Some credit cards raise your interest rate
if your balance exceeds a certain amount, and will
charge you numerous late fees and other
miscellaneous charges if you exceed your credit limit,
even if the reason you are over your limit is due
to fees and penalties.
You
should know exactly when you will be billed each
month and prepare to send your payment in several
days before the due date. Late payments will
result in additional fees and could reflect badly
on your
credit report.
Even if you plan to make your payment online, plan
to do so at least 5 business days before your bill
is due to avoid any possibility of late
payments. It is very tempting to use your credit
card for cash advances.
You should avoid cash advances except in the case
of emergency. Cash advances generally come with a
higher interest rate than regular purchases and
you will be charged an additional fee for each
cash advance.
Even if your interest rate
is relatively low, the rate you are charged for
amounts resulting from cash advances can be
significantly higher.
Be
very careful about how and when you use your
credit cards. Never loan your credit card to
friends and make sure you protect your card at all
times. Identity theft and credit card fraud are
major problems. You will need to take the
appropriate safety precautions to avoid either of
these situations. When your monthly statement
arrives, make sure you have kept all of your
receipts and check your receipts against your
bill. If you find any errors, report them
immediately to your credit card company. You can
learn to manage your credit wisely by practicing
good credit habits now. Credit cards are almost a
necessity in our society, but in obtaining credit
you must learn good spending habits and make smart
financial decisions.
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