Credit cards offer convenience. You do not need to carry cash to make purchases because you can charge them and then pay for them when you receive your bill. To keep them from costing lots of money, credit cards require discipline on the part of the card holder. Card holders should always try to pay their balance in full by the due date each month in order to avoid interest payments.

Although most people refer to all cards as "credit cards," there are actually two different types: credit cards and charge cards. A credit card is a revolving account allowing the card holder to charge items up to their assigned credit limit. The monthly bill for a revolving account shows the total amount owed and a minimum monthly payment. Interest is charged on any amount not paid. The interest charged is added to the next month's bill.

MasterCard and VISA are two common examples of credit cards. These are national-use cards and are issued by many credit unions and other financial institutions. MasterCard and VISA are accepted by most businesses accepting credit cards.

Retail stores also offer credit cards to be used to purchase items from their store. These cards often have higher interest rates but typically do not charge an annual fee.

A charge card is a single payment account. The entire bill must be paid off each month. American Express and Diner's Club are examples of charge cards. Charge cards often have an annual membership fee.

Knowing what type of cards are available and how to shop for the best deal will save you money and help you get off to a good start in preparing to establish your credit history.

Are you planning on getting a credit card or staying away from them?

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