Credit Cards that Make Sense for You

There are four types of credit cards, each with its own advantages and disadvantages, from which you can choose. The first, most familiar type is the credit card. Credit cards initiate with big companies such as Visa®, MasterCard® and Discover®, who cooperate with banks, who then issue the actual card and regulate spending and billing according to Visa or MasterCard’s (or other, much smaller competitors) rules. Credit cards permit revolving debt – that is, in each billing cycle, you may spend money up to a certain amount and also pay back some or all of the money spent in the previous cycle. If you carry no debt, then credit cards are a great way to make purchases between paychecks – as long as you pay them off each month, no interest accrues. Credit cards are also ideal for use in emergencies, when you may not have the cash on hand to pay for an immediate necessity. However, many people spend much more than they pay back each month, sending them into a spiral of increasing interest fees and late fees that can result in financial disaster. Credit cards, therefore, must always be handled with care: used correctly, they can be extremely convenient - but used improperly they can end in bankruptcy.

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