Credit Cards

Almost every day, you're involved in some type of financial transaction requiring an educated decision. Credit cards are often more convenient to use than paying cash. But use of credit cards may get out of control. Credit is a loan, a debt that must be repaid. So why use a credit card? They are great for emergencies and can help you establish a good credit history. Your credit card statement can help you keep track of your expenses and might even categorize the type of expense.

Should you have a credit card? Probably.
Should you have multiple credit cards? Probably, but not too many. Every credit card application is recorded on your credit report whether or not you actually use the card.

When shopping for a credit card, and yes, you should shop around, consider the following

• What is the annual percentage rate (APR)? hint -lower is better
• Is the APR fixed or variable?
• What are the fees?
• Is it a "secured" or "unsecured" card? Secured cards are useful when you are trying to establish a credit history, but they require a deposit. Unsecured cards are usually obtained when you already have a good credit history.
• Read the fine print! Every credit card comes with a disclosure summary that will discuss the grace period for repayments, annual fees, transaction fees, and other very important details.

EdFund's Managing Credit Cards video includes credit card basics, advantages and disadvantages, credit reports and scores, and strategies for managing debt.

Paying off your credit card?

Remember - Don't confuse debit and ATM cards with credit cards though they are physically identical. Debit and ATM cards are linked directly to a checking or savings account. Purchases made with them are immediately deducted from your account, with or without fees. This differs from the credit card which effectively incurs a debt.