5 Credit Card Facts and Quick Tips

Borrowing
girl shopping with a credit card online

While credit cards can be a great first step to building credit history, make sure you know the responsibilities of owning one before you say yes to any special introductory deals. We’re often bombarded with offers, but how do you choose the card that works best for you?
 

5 Credit Card Facts and Quick Tips

  1. A credit card is a loan - or money borrowed from a financial institution - to pay for your expenses. Credit cards are considered a “revolving line of credit” meaning as you pay off your balance, the funds are available to you again without having to reapply
  2. Review the interest rate before applying for a credit card. This is the percentage that a card issuer will charge you if you don’t pay off the entire balance each month. It’s the cost of borrowing their money. The lower the interest rate, the less you’ll have to pay in the long run.
  3. Pay your monthly balance on time and in full to avoid being charged late fees or interest, which can damage your credit score. Having a low credit score makes it difficult and more expensive to acquire future loans or even rent an apartment in the future.
  4. Treat your credit card like cash by only using it to pay for expenses within your budget, and expenses you can afford at the time your bill is due. Don’t be fooled - your credit card is not “extra income.”
  5. Get to know your billing cycle – or how often you’ll need to pay the balance on your credit card. Billing cycles differ per institution, but most cycles are anywhere from 20-45 days. Staying on top of this date can help you make sure that you’re paying in full and on time, thus creating a higher credit score and lower interest rates on future loans.

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