The cost of credit cards can often negate their benefits if you let it
. Many consumers are so excited to finally get a credit card that they often overlook the true cost of them. Many are unaware that the $85.00 basketball shoes may end up costing them $125.00 after all costs and fees.
A common cost the most people are aware of is the interest charge or the APR. This is the amount of interest that you are charged on your credit card balance if you don't pay within the grace period. They grace period allows you to pay you balance in full without being charged interest. Once the grace period is over, you will pay interest on your running daily balance. You can avoid these fees by paying your balance in full as soon as it arrives.
Another cost of credit cards is the annual fee. If you have sub par credit, you will likely qualify for a card that charges an annual fee. These fees vary by card so instead of taking the first card that is offered to you; you can shop for cards with the lowest fee or no fee at all.
The worst fees you can pay are late and over the limit fees. In addition to your interest charges, you are paying this extra money. These extra fees really do add up fast! Paying over the limit fees is a sign that you are in financial trouble. If you find yourself in this situation, you really need to take an inventory of your financial obligations and make changes in your spending patterns or enlist the help of a credit counselor.
Having the ability to charges items give you flexibility to make purchases but the cost of credit cards can put you debt if you don't control you charging habits. You can avoid these fees altogether by paying you bill as soon as it arrives!