Money Club for Young Adults
Understanding Credit Cards
Important: If you have credit card debt you should not be investing. Instead, you should be paying off your credit card debt. Credit cards charge +20% interest.
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A credit card allows you to spend money you do not have by taking on debt. You can do this in two ways:
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By buying goods and services.
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Getting a cash advance (from a bank machine).
The Good:
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Convenience: Makes online and in-store purchases a snap. You do not have to carry cash around .
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Interest free loan: As long as you pay off your entire outstanding balance each month.
The Bad:
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Convenience: It is very easy to overspend
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The Ugly:
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Nosebleed high interest rates (min 20%): You will pay this if you do not pay off your entire balance each month.
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Using your credit card for cash advances (like from a bank machine) is especially punitive.​
Two Important Habits To Build
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Pay your entire balance off each month to avoid sky-high interest charges. Only buy items with your credit card that you can pay off when the bill comes due.
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Avoid taking cash advances using your credit card – interest is charged immediately on these withdrawals.
To Learn More
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​How do credit cards work? click here
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Tips to keep your credit card safe - click here
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Protect yourself from identity theft - click here​​​​​