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Credit Cards allow the person holding the card to borrow money against the card and create debt. The credit card debt must now be repaid on a monthly basis by the credit card holder. The credit card lenders will determine if a person is credit worthy by checking there credit score. After they approve you for a credit card then they set a limit on the amount of credit you get depending on your credit score number. If you charge more than this amount then they usually charge you a penalty or a fee..
People can get a credit and debit card confused because they look the same. A debit card is however attached right to your bank account and when you purchase something using it then you are deducted the amount charged directly out of your bank account.
Know that with a credit card you to have a balance every month. There is an rate of interest that is attached to the credit card and this is the amount annually you will be charged on the credit balance that your card has on it. Always know to look for the best rate you can when looking to apply for a credit card because it can save you a bunch of money.
It is also important to know that you should always make payments timely on your bank issued credit card because when you are late or miss payments the credit card issuer will raise the interest rate to the maximum amount they can charge you and that is usually about 25 to 30%.
Each month the credit card holder will receive a statement that will have the charges that were made during the previous month and it will detail what interest rate is being charged. It is very important that you check and make sure that the charges that are on your statement are your and that everything is accurate as far as the rate of interest you are being charged.
A credit card is a great way to give you and your spouce some flexibility every month when it comes to purchasing things you want before you get paid. Always try to stay within your credit limits of what you can afford because getting into trouble with credit card debt beyond what you can afford can cause you great problems with your credit score.
Author Source: Bryan Burbank
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