by Katerina Nikolas

Created on: August 23, 2010   Last Updated: October 14, 2010

Everyone has heard a story of credit card debt and consumers being penalized with late payment charges. Whilst many struggle with amassed credit card debt it is interesting to note that across the board only 2% of credit card holders are annually charged late payment fees. Those who pay high interest rates and face years of struggle to pay back their debts would benefit from understanding

how credit cards work. A surprising high number of credit card users are financially astute enough to use them to their advantage and even turn a tidy profit from them, but due to the high level of dissatisfaction which credit card debt brings one only tends to hear the worst.

There is no secret to managing your credit cards so that no fees, charges or interest payments are ever made to the card provider. It is a simple case of understanding that when you spend on credit you are borrowing money, and if you do not have the means to repay in full what you have spent by the due date, you will incur interest charges on the unpaid portion of your balance.

Thus an astute consumer uses credit cards for convenience and to take advantage of extended warranties and built in insurance, but never pays a dime for doing so. They understand that paying interest on borrowed money for consumer purchases is nothing more than folly. Perish the thought that a vacation would be paid for on credit then repaid over the course of one year or two, with high interest paid.

The way to manage your credit cards is to only spend what you know you can repay at the end of the month. No giving in to impulse spending or convincing yourself you deserve what you cannot afford as this is the way into debt, or at least paying far more for your purchase than the original ticket price. Never carry a balance and never only pay the minimum payment or your debt will stretch out over the years and could well end up costing you almost double the original amount borrowed. It is true that credit card providers are happy to see you paying only the minimum payment as you feed their coffers with your interest payments.

Of course the banks have the advantage as many people take out credit cards with little or no understanding of how they really work, and a fair majority never take the time to read the terms and conditions. When an introductory low interest rate suddenly disappears before their eyes they have simply breached a term of the conditions which was there in the agreement all along. Anyone who makes two

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