Credit cards are useful to build a good credit score. Also, credit cards make purchasing and applying for loans quite convenient and easy. Whether you are a heavy credit card user or not, here are a few things you need to know about credit cards.

• Credit cards give you the privilege of carrying a balance. You have to pay an interest on the balance you carry and it is like a loan.

If you have paid all the outstanding amount and have no balance carried forward, you will not have any interest to pay.

You need to ensure that you have read the fine print before signing a credit card agreement. Learn about the annual fees, the interest rate, and the terms of repayment. You need to know what you are signing up for.

Whether you want to build your credit from the scratch or rebuild it all over again, you will find a credit card that fits your needs. There are credit cards for every type of consumer in the market.

The interest amount paid by you is determined according to the interest rate applicable to the loan. This charge is known as the Annual Percentage Rate or APR. Your credit card may have a fixed rate or a variable rate. If there is a balance in your account, you will pay interest which will be compounded daily. It is ideal to choose a fixed rate loan in order to ensure that you will be paying the same fixed interest amount in case of an outstanding payment.

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• It is ideal to pay the monthly payment on time in order to build a credit score, but if you are just paying the minimum amount, you will still be in debt for a longer duration. If you have funds, it is ideal to pay the outstanding amount in one go.
• Using a credit card could encourage you to spend much more than paying in cash. A credit card gives you purchasing power, but on the flip side, you end up spending a lot more than necessary.
• A credit card is easy and convenient to use, but if not used wisely, you can end up in a pile of debt. If you do not meet the monthly payments on time, you will have to pay the penalty and a higher APR on the outstanding amount.
• The Credit Card Accountability Responsibility and Disclosure Act of 2009 has been established to protect the consumers against high interest rates, tricky payment deadlines, and excessive fees.
• There is less protection from fraud in case of a debit card as compared to a credit card.
• Credit cards will protect you against fraud and loss. If you lose the card, all you have to do is notify the credit card company and they will close the account. They will open a new account for you and issue a new card. Certain issuers take up all the liability for credit card fraud and keep your risk to a minimum.

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