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A Beginners Guide to Credit Card Fees & Interest Rates

Struggling to manage your credit cards? Here’s what you should know about credit card feeds, interest rates, and the best time to pay them off!

If you’re struggling to manage your credit card debt, it’s a good idea to seek help and sign up for credit counselling. However, being aware of the ins and outs of credit card interest can go a long way towards assisting you as you pay off your debts and rebuild your credit. Here’s what you should know about credit card feeds, interest rates, and the best time to pay them off!


How does credit card interest really work?
If you carry a balance on your credit card, you’ll be charged interest. Your purchases are subject to an annual percentage rate (APR), but you’re actually charged interest daily. Say your APR is 15%. This means that your daily interest rate is 0.04%. If your balance is $1,000 one day, it becomes $1,000.40 the next. At the end of the month, you’ll owe $1,013. Few people know this, but each purchase has an immediate impact on the interest charges you have to pay each month.

How are interest rates determined?
Credit card interest rates are typically much higher than mortgage rates. This is because credit cards provide unsecured credit, which means there’s no collateral backing the loan. Another major factor in determining your interest rate is your credit score. Finally, if you fail to make your payments on time, you’re likely to see your interest rate go up or lose access to more advantageous credit cards.

Start Building Your Credit Score Early
Good credit can make managing your finances much easier. A good way to build a solid credit history is to start early and adopt conservative spending habits. Getting a small loan and repaying it quickly is a good way to start. Another option is to get a credit card as a student and pay it in full every month. Starting early allows you to establish a good credit record, which will make things easier when you want to make major purchases down the road.

When is the best time to pay?
The best practice is to pay your credit card in full by the due date. This allows you to take advantage of the grace period, which means you won’t pay interest on your purchases. If that’s not an option,credit counselling can help you find ways to organize your finances so your monthly payments make a dent in your principal instead of chipping away at accumulated interest.

Let Us Help You Find a New Beginning ™
It’s never too late to start fixing your credit. With the help of licensed insolvency trustees, you could be on your way to financial independence faster than you think. The dedicated and experiences members of the D. & A. Macleod Company team offer trustworthy credit counselling, so please don’t hesitate tocall us today to schedule a free consultation. Make a commitment to yourself. Declare that everything is under control and that tomorrow really is a new beginning™.

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