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Credit Cards

Credit Cards: What You Need To Know

Studies have shown that people generally maintain a business relationship with their first card issuer for 15 years, which is why creditors want to get customers when they are young. The relationship lasts so long because the young consumer doesn't know how to find better deals.

Many people are suggesting that credit card companies are aggressively trying to get students hooked on credit by luring them with T-shirts and other freebies when they apply for cards. This guide is designed to give you the facts you need to be a wise consumer and the tools to use credit to your advantage.

A credit card is not an invitation to spend money you don't have, and you must beware of falling into a credit card trap. Say you run up $500 on a credit card that charges 15% interest and requires a 2 percent minimum payment (never more than $20) each month. If you never charge another item, but only make minimum payments, it will take 6 years and seven months to repay your debt. When all is said and done you will have paid nearly $300 in interest on the $500 purchase.

Credit card issuers will also penalize you if you pay late or go over your credit limit. Always pay on time, even if it is just the minimum. Late fees have skyrocketed and it's not uncommon to find up to a $30 charge applied for a payment that's only a day late and issuers may also jack up your interest rate without notifying you.

These days, credit extends beyond just the amount of money you owe. Many employers and colleges may review your credit reports to judge your character. A history of late payments, over-the-limit charges, or too much debt may not paint a pretty picture. We hope that this guide will help you avoid credit disasters and give you a better understanding of the credit process.

Advantages & Disadvantages Of Using Credit

Advantages:


Disadvantages:

Your Credit Responsibilities

  

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