Interest Rates

• An unsecured credit card (one that is not tied to a deposit account) essentially acts as a loan each time you use it. Creditors do not charge you for this service, unless you are not able to pay the full balance of your bill each month by the due date. If you pay only the minimum due or anything less than the full amount, you will be charged interest by the issuer, which can rise at any time. However, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 limits why creditors may raise your rates, such as for being 60 days late.
  
  

Rewards

• Credit card companies compete for your business by offering rewards for using your card. Issuers may give you airplane miles that can be redeemed for airline tickets, points for each dollar you spend that can be used toward merchandise with participating retailers or cash based on the accumulation rate of your credit agreement. Make sure your rewards do not have an expiration date and check the interest rate associated with the program. You may save more money by using a low-interest card rather than spending to earn rewards.
  
  

Cash Advances

• Withdrawing cash from your credit card at an ATM can be expensive and should be done in an urgent situation only. These transactions are not like ordinary purchases. Cash advances incur fees (usually a percentage of your withdrawal) and a higher interest rate than purchases. Also, when you use your card to buy items, you are given a grace period to pay the money back and interest doesn't accrue until after the due date. However, with a cash advance, it is common to begin to accrue interest as soon as you withdraw the money.
  
  

Balance Transfers

• If you have several credit card payments a month, you may be charged different interest rates on each one. Balance transfers allow you to consolidate your credit accounts into one low-interest credit card. However, some balance transfers incur excessive fees based on a percentage of the amount. You may be able to obtain a very low interest rate, or one at zero percent. Although, it may be an introductory offer only and the rate may rise a few months later. Balance transfers allow you to free up your current cards that were previously maxed out. If your finances are in trouble because you cannot control your spending, destroy the cards so that you are not tempted to use them again.