Credit cards can be a powerful financial tool to possess. They have the allure of paying for something when you don't really have the money to buy it. Unfortunately that makes these financial instruments that you carry in your wallet extremely dangerous. Charging a few things here, then there, and before you know it, you're buried in massive amounts of credit card debt. While it's still important to own a credit card and work to build good credit in your name, it's very important that you understand the various terms and fine print as well. Read on for more info on what your credit card is all about.

Using a credit card to make a purchase is the same as receiving a loan to buy something. You'll eventually need to pay for what you bought. The kicker is that you don't always get what you bought at the price you paid. This is due to the various interest rates and other fees that come along with having a credit card. For example, credit cards all have APR's or Annual Percentage Rates. APR basically measure of the cost of credit, expressed as a yearly interest rate. You'll sometimes see deals for those 0% credit cards, but in the fine print after one year, the APR rises up to a higher rate, such as 10% or higher. You may also be charged an interest rate on any cash advances you get with your credit card as well. It's very important to understand how the rates can possibly cost you a lot of money, so keep an eye on these with any card you plan to acquire.

As for fees, this is where credit cards can also make their money off you. Some credit card companies may also include in their fine print that their is an annual fee for having the card. This can tack on another $15-$69 or so onto your card balance each year. Other fees include things like transaction fees, fees for making cash advance withdrawals from your card, and fees for not making a monthly payment on time. All of these fees add up to cost you even more money for carrying that plastic. There's even some cards that have monthly fees for having that card, whether you make purchases or not.

Generally there are several things you want to make sure you do if you have a credit card. Always make the payments on time, and in fact try to pay more than the minimum always. If you pay off a card and feel it could get you into trouble, cut that card up, but don't close the account. A closed credit card will close off that amount of credit in your name and hurt your overall credit report. It's also important to keep your credit card safely with you rather than loaning it out to friends. You want to avoid someone else running up charges on your account, and ultimately hurting your credit.

When it's all said and done, you do have the power to keep your credit report clean. Understanding how to use a credit card and its fees is really half the battle. Keeping your spending habits under control is the other half.