What is a Credit Card?

Credit cards are the most flexible form of short-term borrowing and offer the most flexible repayment terms.

A credit card allows you to buy things even though you might not have the money to pay for it right away. The company that gave you the card lets you spend up to an agreed upon dollar amount and then makes additional money available to you as you pay off what you've spent.
You must pay at least a minimum amount by the due date, generally once every month. You will pay a finance charge or interest on any amount you do not pay by the due date.

While they can be very useful, credit cards can also be risky. Even people who are usually good with their money get into trouble with credit cards. The problem is that people use their credit cards too often and let their debt add up. Then they can only pay back small amounts at a time. This ends up costing a lot of money in finance charges.


Tips:

• Treat your credit card as if it's cash. Try to charge only what you can pay off the next month or soon thereafter.
  
  
• Many credit card issuers offer introductory interest rates (introductory APRs) that are much lower than the standard interest rates. Consumers may take advantage of these lower rates to transfer balances from their higher interest credit cards to the new, lower interest credit cards to save money on interest charges.
  
  
• Make your payments several business days before the specified due date. Late payments have negative effects on your credit history, even if your entire outstanding balance is later paid in full. Credit card issuers and other lenders request your credit reports from credit bureaus to check your credit history. Too many late payments recorded on your credit report could make it harder for you to qualify for any kind of loan or credit card in the future.