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Credit Cards

Understanding Credit Cards

Credit cards are one of the best ways you can borrow money in order to buy the things that you need now but might now be able to pay for in the moment. The best credit cards allow you to borrow this money for free because they have a 0 percent interest for loans that are paid off within 30 to 60 days. Advantages to Using Credit Cards There are many reasons that people use credit cards. The first was already mentioned: the ability it provides you with to borrow money with no interest. But credit cards also allow you to avoid paying for things with fraudulent companies. Sometimes when you buy something, especially online, you will find out later that it is a fraudulent company designed to take your money without providing you with the goods or services you paid for. If you call the company to report fraudulent activity on your card, they will reverse the charges and you don’t have to pay the fake company. If you credit card information is somehow stolen and used to make purchases that you didn’t actually make, even the cheapest credit cards will allow you to reverse those charges as well, and at that point, you will get a new card with new information on it. When making purchases with cash, once you have paid for something, the money is gone. Or, if you are robbed of your physical money, there is usually no way to recover it. For this reason, many people prefer making even normal, everyday purchases with their credit cards to avoid carrying too much cash. Disadvantages to Using Credit Cards Even the best credit cards have disadvantages. The primary one is that if you do not pay back the borrowed money within the grace period, you will have to pay interest on the total balance, and these interest rates are usually much higher than traditional bank loans. There are also penalty charges added to your card if you don’t pay the balance on time or if you miss a payment. However, if you are diligent in paying off the balance on time and careful to not accumulate a greater balance than you are able to pay off in one or two months, you don’t have to worry about these. Choosing a Credit Card There are a number of different types of credit cards out there. The cheapest credit cards do not have yearly fees attached to them, but usually have higher interest rates, and may have lower lines of credit, which refers to the amount that you are allowed to borrow each month. Some of the best credit cards have yearly fees that you pay, but they also allow you to accumulate points or receive a percentage of cash back on purchases. These can be extremely beneficial, especially if you pay your balance off every month. Many of these that include yearly fees also have lower monthly interest rates which is helpful if you do accumulate debt with them. The type of credit card you will be able to get may also depend on your credit rating, so keep this in mind as you are looking for credit cards. However, if you have bad credit or no credit, getting one of the cheapest credit cards is one of the best ways you can start to build credit by paying off the total balance on time every month.

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There are also penalty charges added to your card if you don’t pay the balance on time or if you miss a payment.
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