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Understanding Credit Cards

Remember, a credit card is not free money. It's a loan with an interest rate attached to it. The longer you take to pay off the balance, the more interest you pay. So before you use your card, know the real cost of the item. The calculator to the right will help you figure out the real cost of whatever it is you want to buy.

  • What is the Annual Percentage Rate (APR)1 and will it increase after an introductory period? If so, what will the new figure be?
  • Is there an annual fee? If so, how much?
  • If I make a late payment, will the APR increase? If so, to what?
  • If I make a late payment, will I be charged a fee? If so, how much?
  • Is there a grace period on new purchases before interest kicks in? How long is the grace period? What will the APR be once it ends?
  • Does the card come with special features such as reward points, travel miles or free car rental insurance.

Understanding Loans

Paying cash for your new house or car would be nice. But in reality, most of us will take out loans for big purchases like these. The term of the loan can make a big difference in the cost of the item you're purchasing. Before you borrow, be sure you understand how the term and APR can affect the final cost. When applying for a loan, be sure to get the answers to the following questions:

  • What is the loan's Annual Percentage Rate (APR)?
  • What is the term of the loan? What terms are available?
  • Is a down payment or co-signer required?
  • How much will the monthly payment be? Can I afford it?
  • Are there late charges? If so, how much?
  • Are discounts available if I make automatic transfers because I'm Active Duty or a member of another organization?


1APR is the yearly interest rate charged on the amount borrowed.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.