When you get a credit card, you can use the card to make payments and at the end of the month you get a bill. You then pay all or part of that bill. If you don’t pay the full bill then the credit card company will charge you interest. Lots of people who use credit cards carry a balance. This means they owe some money to the credit card company, and they are being charged interest (and sometimes other fees) on the balance. If you miss a payment entirely you will get a late charge. Late charges on credit cards can be $30 or more for every missed payment. Missing payments can also raise your interest rate.

You have to pay your credit card bill once a month. Your credit card statement will tell you the due date for your payment. This is the day your payment has to arrive at the credit card company. You should send in your payment up to a week before that date so that the payment arrives on time.

The good, bad, and the ugly of credit cards

The Good:

A credit card is convenient for making purchases. It is much safer to carry around than cash. It is also the best way to create a credit history, which is necessary make large purchases like a home. Often you need a credit card to rent a car or purchase things on the phone or online. Credit cards (and debit cards) can help you track your spending.

The Bad:

You can lose control of your spending habits if you rely on credit cards too often, open a lot of credit card accounts or build up a lot of debt without being disciplined about paying them off.

The Ugly:

If you get behind on your payments, it can be hard to catch up and your interest rate can go up. If you owe a lot of money to credit card companies and only make the minimum payment every month, it can take a long time to pay off your debt. You can damage your credit rating if you are not careful with both your spending and your payments.