I want to get a credit card
Avoid paying interest on your credit card!
If you want to avoid paying interest on your credit card, here is a list of things you should not do.
1- Pay only part of the balance owing on your card
When you charge a purchase to your credit card, you enjoy a 21 day "interest holiday", on one condition: you must pay the FULL balance owing on your purchase before the due date shown on your statement.
Example: You buy a laptop computer, costing $800, in September. When you receive your credit card statement in early October, you must pay the $800 in full before the due date shown on your statement.This is the only way to avoid paying interest. If you pay only $500, you will be charged interest on the full amjount of your purchase, i.e. $800, not just on the $300 balance. This could cost you around $12 if the interest rate on your card is 18%.
Advice: Put some money aside before making a large purchase ; that way, you will avoid paying interest charges.
2- Pay your bill late
Expecting a cheque next week? Is it all that serious if you delay a day or two beyond the due date shown on your credit card statement? The answer is: Yes! Not only will you pay interest on the total balance of your purchases, but your credit record will be annotated accordingly. It is as if you had failed to fulfill your part of the contract with the credit card issuer. This could adversely affect your credit score or, if your prefer, your "borrowing" image.
Advice: If you are unable to pay the full balance on your account on the due date, make at least the minimum payment before that date. As soon as you have some more funds come in, pay the remaining balance in full.
3- Ask for cash advance (withdrawal cash)
A cash advance means withdrawing cash from your credit card account at an automatic teller machine. This is a loan, and there is no holiday on the interest. This means that you will start incurring charges on the date of your withdrawal.
Advice: Before taking a cash advance, review your other options, such as borrowing funds from your parents, for example. If you have already taken a cash advance on your credit card, repay the amount you borrowed as quickly as possible, in ordre to pay less interest.