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Understanding Credit Cards!

Understanding Credit Cards!!

Fact: You don’t have to carry a balance to build credit history.

Credit cards are great tools for building your credit history, and you don’t need to carry an unpaid balance to do so. Your best strategy is to use your credit cards and pay off the bill in full each month, so you keep your overall debt-to-credit limit ratio low..

Fact: A high credit card limit is a good thing.

If you manage your credit cards wisely, a high credit limit can be an advantage. Thirty percent of your credit score is based on your debt-to-credit ratio (the amount you owe in proportion to your total credit limit). If you have a high credit limit and you keep your balances low, your debt-to-credit ratio is also low, which can help your credit score.

Secured credit cards vs. unsecured credit cards

The main difference between a secured credit card and an unsecured credit card is that secured cards require you to place a refundable security deposit when you open your account. Apart from this security deposit, secured and unsecured credit cards aren't necessarily better or worse for your credit. The amount of this deposit typically serves as the credit limit for the secured card, which means you have to pre-pay for purchases with a secured card.


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