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Tip 1

Save - Start on the right path by learning how to spend less than you make.
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Tip 2

Pay Yourself First - take an amount out of each paycheck and put it in a savings account.
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Tip 3

Big Purchases - save the money first to avoid credit card debt.
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Credit Cards

Credit Cards

 

Credit cards are great, but that can cause a lot of trouble as well. The point of a credit card is to use money you don't have to get something. It's a Great idea right, but there's a catch. The bank extends you a line of credit or a credit card agency. Its borrowed money and you have to pay back the amount you use of it.

To make this clear:

You have a credit card Limit of $500. Say you buy a new phone that is about $200. And you put it on your credit card. Your balance is now $200 and your available credit (value on the credit card after this purchase) is $300. When the bill comes in the mail, you should pay the $200 off to avoid interest fees. Most banks will waive any interest fees if you pay the balance at the end of each month. If you can pay the full balance and you let an amount like $100 roll over to the next pay period then you HAVE to pay interest on that $100. The amount of interest depends on your interest rate.

Now that you have the gist of how a credit card works, let's go more in depth. Credit cards are similar to debit cards but with interest rates. There are also fees associated with credit cards and they vary by credit card companies.

There are fees for exceeding your limit, maintenance fees; cash advance fees, late fees, finance charge and more depending on the company you get a credit card from.

So, keep in mind credit cards are very beneficial. They help grow your credit score and they allow you to buy things when you want and can be very helpful in times of crisis. However they can also be detrimental to your credit score and make future purchases difficult if you do not take care and manage your account correctly.
So remember don't buy more on your credit card than you can manage to pay back when the bill comes in each month and monitor you transactions.

 Citation:
"Need to Know: New Regulations for Your Debit and Credit Cards." Federal Reserve Bank of St. Louis | Economic Data, Monetary Rates, Economic Education. N.p., n.d. Web. 30 July 2013.