5 Things You Should Know About Credit Cards

Credit cards - Most of us have them, and most of us use them on a fairly regular basis. But a lot of the time, we don't realise how we are being taken advantage of. The more you know about your credit, the more you can survive the pitfalls and thrive financially.

It's important to know...

WHO works for whom

Believe it or not, credit card companies are actually meant to work for YOU. They all vie for your business so that they can make money off the bill that you're not paying. It's stiff competition out there, with companies offering loads of incentives to win your approval. Cash back, reward travel, free gas-you have more power than you think, even when it comes to negotiating your interest rate.

But to do that you first have to know....

WHAT you're getting yourself into

Good credit is essential. When you're looking to take out a loan for that dream house, you'll never get it without good credit. And the better your credit, the more pull you'll have when negotiating your interest rate. It's a catch 22-if your credit is already good, then the easier time you'll have keeping it that way.

But the only way to keep your score high is to know....

WHEN to pay and HOW much

Ideally, you'd pay off your bill at the end of every month. Realistically, you barely make your minimum amount due. Card companies love this and always put themselves first so that each month, your money first goes to paying off the interest so that you eventually build more debt and owe more money over time.

So it's important to know...

WHERE the fees hide

Card companies will entice you with a promise of "No annual fee" but then turn around and gouge you two months later. Or even worse, credit card companies are notorious for pitching "0% interest rates" or "no late fees" and then when you receive the card, the terms in the agreement are nowhere near what you originally signed up for. This tactic is so common that it has become known as the "bait and switch" and can be avoided if you read your card agreement carefully.

But credit cards aren't all bad, especially if you know...

WHY you have one

Credit cards offer a lot more protection that debit cards. And if you maintain good credit, you'll receive loads of kickbacks. Some people are even able to get loans with little or no interest rates just based on their high credit score alone.

So while having a credit card does leave you vulnerable to overspending and loads of debt, remember that if you keep up with your monthly payment and pay off your debt at the end of each month, all the fine print reading could pay off huge with cash back, miles, and other rewards.

If you're looking to finally rid yourself of debt and are looking for advice on bankruptcy, visit the ClearDebt IVA site. Apply for an IVA, an Individual Voluntary Arrangement with ClearDebt and get your debt under control.

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