Credit Cards

Credit cards, we all want one and it seems every credit card company wants to give you one.  The trouble is, very few people know how to manage credit cards.  It seems nearly every day a new offer comes in the mail promising lower introductory rates or better incentives to use their card.  Unfortunately, with annual fees and high annual percentage rates these same cards can cause the user to become immensely in debt.

Some important terms to consider when learning about credit cards:

• Annual Fee - a yearly fee assessed once a year whether you use the card or not

• APR - annual percentage rate, the rate charged each month on your balance

• Grace Period - a time period sometimes applied to new purchases before the APR is applied

• Cash Advance - Money drawn on your credit card, a higher APR normally applies to this transaction

Credit card companies will try to entice you with free gifts such as airline miles, hotel stays, and t-shirts or with low introductory rates.  The free gifts often come with fine print such as black-out dates and the introductory rates disappear after three to six months.  Shop around and find a credit card with no annual fee and a fixed APR that you can live with.  It is important to have one or two credit cards, but be sure you are prepared to manage them.

To learn more, go to Choosing and Using Credit Cards. 

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Last modified 06/18/02