7 At some point, you are very likely to have one or more credit cards (Visa, MasterCard, American Express). With that in mind, here are some things you should know about credit cards. The credit card companies all want you as a customer. You’ve seen the commercials. Use our card and get rewards...or a low annual fee...or double bonus points...or a low introductory rate. Credit card companies make a lot of money off their customers through annual fees, late fees, and by charging interest on unpaid balances. This is why they will all try to convince you that their card is the one you need. Before you apply for any credit card, check out their fees, interest rates, rewards programs, etc. Read the fine print. When you use a credit card, you're getting a loan. A credit card allows you to borrow money from a bank or business to make purchases. You are then given a period of time (usually a month) to repay the loan. If you do not pay the balance within the designated time period, you’re charged interest on the unpaid amount. Pay the balance in full. Many credit card users pay off their balance in full each month. They pay only the amount they charged—no interest. This is smart! The majority of credit card holders, however, make minimum or partial payments each month. Because they carry balances on their cards, they’re charged interest, and those charges compound month after month until the balance is paid in full. Credit card companies love these people—they are the industry’s bread and butter! Pay credit card balances on time. Paying a credit card balance in full isn't enough—it also needs to be paid on time. People who pay their credit card bill even a single day after the due date could be charged a late fee of $25 to $35, which will be reflected in their next billing statement. Using a credit card responsibly helps build a good credit record, which is very important. (More on this later.)