But wait! The Credit Card statement has just arrived. And yes, you really did spend that much money! So how can you use your credit card and not blow the budget??? 

The Basic Facts:

• Most credit card companies charge between 20 - 22% interest on outstanding balances.  Some companies offer a low-rate credit card, but remember the annual fee will be higher on these cards to compensate for the loss of income.
  
  

• Interest is charged by most credit card companies on the previous months outstanding balance after payments, plus any purchases made during the current month.  So if you can afford to payoff your credit card in full each month by the due date, no interest will be payable.
  
  

• If your credit card is paid in full each month, you will have an interest free period for PURCHASES, remember interest is payable for CASH ADVANCES from the day of the advance until the full outstanding amount of the card is repaid.
  
  

• Most credit card companies will charge a cash advance fee for withdrawing money from the card.  Usually the fee is increased for international withdrawals (i.e withdrawing money from an ATM while in a different country).
  
  

• Most credit card companies will charge a currency conversion fee on international purchases and cash advances.  Normally a percentage of the purchase or cash advance amount.
  
  

• If applying for a home loan the bank or lending institution will take into account the limit of your credit card, so if you can, look at paying off your card and reducing the limit down before doing your loan application.
  
  

• Many companies offer credit card insurance.  The premiums are usually charged on the outstanding balance of your account at the end of the cycle and added to the balance.
  
  

• Always read the terms and conditions when applying for a card, all this information is normally in the fine print.
  
  

Also remember your credit card can be your best friend, but it can also be your worst enemy. Always keep your receipts to reconcile with your statement, by doing this you will be more aware of your spending habits and if you ever have any queries contact your card company.

Article by Rachel Goodchild

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