Read the Fine Print
It is very important to understand the terms of your credit cards so you don't get caught paying unnecessary fees or high interest rates. Remember to always read the fine print and make sure you are familiar with all the details of your cards, including when your monthly payments are due, what happens if you are late making a payment, and any additional fees you may be responsible for.
APR
The term APR, or annual percentage rate, refers to the total amount of interest and fees you are required to pay per year on a specific credit card balance. Your APR may change while you have your credit card so it is important to always know your APR. The higher it is, the more money you will have to pay on your card balance each month, and the more expensive it will be for you to make purchases.
For example, if you have an APR of 19 percent and you spend $300 on your credit card, the money you will owe at the end of the month is not $300, it's actually $305.70. That may not sound like a lot, but it can definitely add up! Every month that you do not pay off your entire balance you are charged 19 percent each month on that balance. It all adds up quickly and that's why shopping around for a credit card with a low APR can make a big difference. See how much that interest will really cost you with this credit calculator.
Transaction Fees
It is also important to be aware of any transaction fees associated with your credit card. Transaction fees are sometimes assessed when you transfer a balance from one credit card to another or when you take a cash advance from an ATM. Be aware of these
Finance Charges
The dollar amount of interest and other fees (transaction fees, balance transfer fees, etc.) you are charged from your credit card company each month are also called finance charges. Finance charges may be assessed each month for as long as you have your card, and are usually expressed in terms of actual dollar amounts (i.e., $50 per month on a $10,000 loan). APR , in contrast, is calculated and expressed in terms of percentages.
Annual Fee
Sometimes a credit card company will charge you a fee every year for using its services. This annual fee will usually appear on your credit card statement once a year. It's important to know you may be required to pay this fee even if you never use the card for any purchases.
Know What the Fees and Charges Are
Like any business, credit card companies want to make money. They make their money by lending money—with interest. The more customers they have, the more money they make. To attract new business, credit card companies often offer special deals to new customers—you've seen them: low introductory offer, no annual fee, free balance transfers!
These offers can save you money, but they are temporary. Make sure you know when and why these rates could change and what your rate will be when the introductory period is over. For all accounts, not just new ones, you should also be aware of other circumstances that will cause your rate to change. On some cards, there may be an additional charge if you go over the credit limit and on some other cards, the interest rate may increase if you are late making a payment even once.
Always review your credit card agreements carefully before applying for and using a card and look at your statements closely each month to make sure you understand all the charges.
