Credit Cards 101

Toronto, ON – Getting your first credit card is a big deal. It can be a sign of maturity and a milestone event. However, that first credit card can also be tempting and intimidating.

Credit cards are powerful tools to help build credit and financial skills,” says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc. “Unfortunately they can also be dangerous if not used responsibly.”

Canadians using their first credit card responsibly can quickly begin to establish a good credit history that can continue to benefit them well into the future. On the other hand, treating that credit card like free money can quickly turn credit into your worst nightmare.

Following these tips from Consolidated Credit can help Canadians prevent themselves from falling victim to credit card debt:

Understand the terms – One of the most important things to do when you first get a credit card is to read the terms and agreement. This information will include the interest rate, fees, payment schedule, late payment penalties and possible rewards. The terms and agreement will also indicate if your credit card APR is fixed or variable and if you will be required to pay an annual fee.Never go over your limit – When you are approved for a credit card, you’ll be given a spending limit based on your credit score. This could be anywhere from a hundred to thousands of dollars. Going over the limit can cause some serious credit card debt problems, including over limit fees and an increased APR. Pay balance in full – The best way to be a responsible credit card user is to pay the balance in full each month. This means you shouldn’t spend money that you don’t have. Paying balances in full will help you avoid being charged interest and can help build your credit score.Don’t miss a payment – Missing a credit card payment can be detrimental in many ways – you could be charged finance costs, your APR may rise and your credit score can take a hit. Always do your best to pay on time, even if you can only afford the minimum payment. Think before you spend – Swiping your credit card at the cashier is fast and convenient. Before you charge your purchase to your plastic, ask yourself if you’ll be able to pay the debt off in a timely manner. If not, it probably isn’t a smart purchase.

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