When it comes to spending cash, most people don’t leave home first without their credit card in hand. According to the U.S. Census Bureau, card holders make up a whopping 80 percent of the adult population. Most people's relationship with this piece of plastic is one of love and hate. Credit cards offer the convenience of making purchases when you don’t have the upfront cash to do so. They also come in handy for emergencies. At the same time, credit cards can easily put you into a lot of debt if you fail to pay the balance off in full. Credit card companies make money by charging interest on the purchases you make. To avoid drowning in a pile of debt, look at your bill closely each month.
Every time you make a purchase using your credit card, it’s documented on your bill. The activity log will include the date the purchase was made, where it was made, and the price of the item. Review your bill’s activity log after each billing cycle. Sometimes merchants may double charge your card by accident. Other times you may notice a charge from a merchant you never made. When this happens, contact the card issuer’s customer service department to report the errors and have them corrected.
Your monthly credit card statement will include the amount owed and the due date. While credit cards allow you to pay the minimum balance, it’s always wise to pay the bill off in full each month to avoid finance charges. If you pay just the minimum balance, it may take years to pay the card off in its entirety – costing you more money in the long run. Pay your balance by the due date. The Credit Card Act of 2009 mandates that late fees can be up to $25 for the first late payment, and $35 if you've already made one late payment in a six-month period.
Annual Percentage Rate
The interest rate will appear on your credit card. Pay attention to it because credit card companies change the rate periodically. Under the Credit Card Act of 2009, card issuers must notify cardholders 45 days in advance before doing so. However, the law doesn't cap interest rates. The number is likely to increase if you are only making the minimum payment on the balance, are late paying your bill, or have little credit remaining. While you want the APR to be as low as possible to save on finance charges, it’s not uncommon for it to be as high as 25 percent. If you find your APR is too high, consider looking for a new credit card with a lower APR.
Your available credit shows how much money you have available on your card before it reaches its limit. The last thing you want to do is pull out your card to pay for your purchase and have the cashier tell you the card was declined. This can happen if you don’t have enough available credit. Maxing out your credit card will show up on your credit report and will hurt your credit score.
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