Credit cards provide great convenience to consumers, but they do so at a price. Before you sign up for that first credit card or pull an existing one out of your wallet, it is important to prepare your budget plan and make sure you can keep your spending under control.
Keep in mind that carrying even a small balance can cost you hundreds of dollars in interest charges and other fees over time. Paying off your credit card at the end of every month gives you all the convenience of paying with credit with none of the costs.
Know the Interest Rate
It is important to know the interest rate on each credit card you carry, even if you plan to pay off the balance every month. Emergencies arise, and when they do you might need to spend more than you anticipated. Choosing a credit card with a reasonable interest rate can allow you to recover from those emergency situations without accruing a ton of extra charges.
Know the Terms
Understanding the terms of your new credit card is just as important as knowing the interest rate. It is important to know how long you have to make a payment, what charges will accrue if the payment is late and what procedures are in place if you need to dispute a charge.
Knowing these basic things will make using your credit card a lot easier and much less expensive. Be sure to read the fine print carefully. If there is anything you do not understand, do not be afraid to reach out to the customer service staff for clarification.
Watch Your Mail
Paying your bill on time and in full allows you to enjoy all the perks of having a credit card without any of the interest charges or other fees. Be sure you know the closing date of your account, and watch the mail carefully for your statement. If you choose to have your statement delivered via email, be sure to adjust your spam filters to make sure the notification makes it through.
Paying the bill promptly is the best way to avoid late fees and interest charges. Keep in mind that it can take several days for your payment to reach the company, and another couple days for the employees to process it. Paying early is the best way to make sure your payment will be credited with plenty of time to spare.
Track Your Spending
Having a credit card makes spending money easy, but it does not make it easy to spend that money wisely. It is even more important to track your spending when you pay with a credit card. After all, any balance you cannot pay off at the end of the billing period will start accruing interest. Those interest charges can really add up, making that morning cup of coffee or dinner out even more costly.
It is a good idea to track your purchases when you shop with a credit card. Not only will this give you a handle on how much you are spending, but it will also help alert you to fraudulent charges and other problems. If you fail to track your spending, you could easily miss a small charge from an unknown merchant or an overcharge from a known one. When you keep track of every dollar you spend, it is easy to reconcile your records when the credit card bill arrives.
A few simple steps can help you get the most out of your credit card and avoid unnecessary fees and charges. Taking the time to track your purchases and read the fine print can pay big dividends down the road.
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