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Choosing the Right Credit Card

A credit card can be helpful or damaging, depending on how it is used. They allow you to make purchases when you do not actually have the cash on hand. They also allow you to make purchases over the Internet or by phone. However, these purchases must be paid back, which can sometimes cause problems.

A credit card is referred to as a revolving credit account. This means that the credit becomes available again, for your use, once it is paid back. Not paying back these purchases can affect your future credit, making it difficult to purchase a home or car. In order to be used wisely, the decision to get and use a credit card must not be taken lightly.

In choosing a credit card, there are many things to consider. You must first consider your past credit history and decide how you would like to use the card. Then, you must consider the costs, features, and benefits of the card. In order to make the best decision, be sure to gather information on several cards that meet your needs.

First, consider your credit history. If you do not have a history or have not paid previous bills on time, you may need a secured credit card. With a secured credit card, you make a deposit, which is held against your credit limit. The credit limit is based on the amount of that deposit. This will allow you to build a new credit file, or repair a poor one. If you qualify for an unsecured credit card, where no deposit is required, better credit may mean a lower interest rate.

Second, you will want to consider how you intend to use the card. Decide whether you will pay off your balance in full each month, carry a balance from month to month, or use it primarily for cash advances. If you intend to pay your bill in full each month, consider a card with no annual fee and a longer grace period. If you would like to carry a balance each month, you will want a low annual percentage rate, or APR. Should you decide to use your card mainly for cash advances, you should look for low fees on cash advances. The fees for cash advances are usually higher than those for purchases.