There are many advantages to having a credit card. It can be used worldwide; helps build up your credit rating and can be a valuable source of funds in an emergency. However there are several things to be aware of before obtaining your first credit card.

Understand the terms

Know the interest rate, the fees and the payment schedule so that you aren’t sprung with any nasty surprises.

Beware of promotional rates

While promotional interest rates are enticing, it can often tempt consumers to purchase more than they can afford to repay. When the introductory rate is over, interest is then charged to the outstanding balance at the normal rate – often as high as 20% p.a.

Play with interest rates

To gain a better understanding of how quickly debt can accrue thanks to interest, make use of online credit card calculators using some hypothetical purchases.

Pay on time

Even if you can’t pay off the outstanding balance in full, it’s imperative that consumers pay at least the minimum amount required on time each period. This will help to avoid late payment fees and avoid damaging your credit history.

Pay in full

By paying the outstanding balance in full each month, consumers are essentially utilising free money and will avoid paying interest charges, all while improving their credit rating. If you can’t pay off the outstanding balance in full, pay as much as you can afford.

If you are ever in need of financial advice, reach out to one of our experienced ChapterTwo consultants today, and benefit from our comprehensive service.