How Best To Use A Credit Card
Below is a MRR and PLR article in category Finance -> subcategory Credit.
How to Best Use a Credit Card
Summary
Navigating the world of credit cards can be daunting if you're a newcomer. With numerous terms and card options, it's crucial to understand the basics before you choose one. Doing your homework will help you make informed decisions. Here’s a guide to effectively using and selecting a credit card.
Understanding Credit Cards
Credit cards are widely used for borrowing money. They are available from various sources both online and offline, offering a wide array of options. Remember, using a credit card means borrowing money, and it's not free. Recognizing this will help you choose a card that meets your needs.
Interest Rates
If you don't plan to pay off your credit card balance in full each month, be aware of the interest rates, calculated as APR (Annual Percentage Rate). Typically, rates range from 13% to 18%, depending on the provider. While lower rates are preferable, also watch out for additional charges like late or transfer fees. If you're only making minimum payments, consider other borrowing options, as credit card interest can be high.
Paying Your Bill
Payment options vary, with some cards requiring full monthly payments, while most only require a minimum payment, usually around 2% of the balance. If not paying in full, choose a card offering benefits like cashback, which can be around 0.5% or more on purchases, putting some money back in your pocket.
Fees
Credit cards often come with fees, including charges for late payments, exceeding limits, and annual usage. If you might occasionally be late, opt for cards with low late fees. Avoid cards with annual fees unless they offer exceptional benefits. Look for introductory offers, such as no interest or fees on transfers for a certain period, which can be advantageous for transferring debt or paying off balances quickly.
Avoiding Debt
To prevent falling into credit card debt, only spend what you can afford and aim to pay as much of the balance as possible each month. Credit cards can be useful for emergencies or spreading the cost of significant expenses. By understanding the basics, you'll secure a better deal and use your card more effectively.
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