If you’re new to credit cards, you might be curious about the potential costs. The answer varies based on the type of card you have and your usage habits.

Can You Use a Card for Free?

Some credit cards come with annual fees, while others do not. You’ll also need to make a monthly minimum payment. Missing this payment or paying less than required will likely result in interest charges or late fees. However, you can avoid these additional costs by paying off your balance in full every month.

Types of Credit Cards

Credit cards come in various types to suit different financial needs and preferences, such as:

0% interest balance transfer cards
Low-interest cards
Rewards cards
Cashback cards
No-frills cards
Struggling with Credit Card Debt? Consider 0% Interest Cards

0% interest credit cards are designed to help you transfer high-interest balances from other cards, allowing you to pay them off faster without incurring interest for a set period (usually 6 to 21 months).

For example, if you owe $5,000 on two credit cards with an average APR of 19%, transferring this balance to a 0% interest card for six months lets you pay down the debt without interest.

Paying Off Your Entire Balance Monthly

If you don’t pay off the entire balance before the promotional period ends, you’ll start accruing interest. For instance, if you reduce your balance to $3,000 and the interest rate jumps to 18% APR, your card could cost about $40 a month in interest.

Credit cards can be useful tools, but avoid using them for unnecessary purchases. Only charge what you can pay off each month to avoid interest charges.

Watch Out for Annual Fees

To avoid paying an annual fee, choose a card without one. Annual fees can range from $49 to $550. If you opt for a card with an annual fee, ensure the benefits outweigh the costs.

Credit cards with annual fees often include:
Rewards cards
Premium credit cards
Secured credit cards
Use Your Card Responsibly

Credit card companies often entice users with cash back, frequent flyer miles, and other rewards. Evaluate the pros and cons before applying for a new card, especially if you already have multiple cards.

Avoid Credit Card Debt

Regardless of the interest rate or rewards, avoid carrying a balance from month to month to prevent debt accumulation. Paying only the minimum monthly payment can lead to long-term debt. For example, with a $3,000 debt and a $100 minimum payment, it would take 40 months to pay off the balance, assuming no new charges.

Take Control of Your Finances

If you’re struggling with credit card debt, consider seeking debt relief. Companies like Reliant Management Solutions can help you reduce your minimum payments, interest rates and you will be able to payoff your debt in 24-60 payments. Get a free savings estimate today.