Credit cards can build your credit history, make you enjoy universal payment acceptance, and provide automatic insurance of rental car, travel or purchase insurance.

But it can be a hard choice choosing the credit card that’s for you, especially since people purchase credit cards not fully knowing how to use them or how they can benefit from owning one. Therefore credit cards get a bad reputation due to most people who don’t know how to use it responsibly.

And they end up being seen as over-priced loans that can cost a great deal in transaction costs, annual fees and interest charges.

But if you take the time to better understand what a credit card is it can help you become disciplined when applying for a credit card. A credit card is essentially a loan, money in your card that you can use that doesn’t belong to you but you’re rather borrowing.

Therefore when applying for a credit card you’ll look at what you can afford when borrowing that you’ll be able to pay back. Therefore depending on what you can afford you can look for the cheapest card with the lowest monthly fee to keep your monthly costs down because if you don’t clear the balance in full each month, then you’ll pay interest.

This will in turn help you use it correctly by paying the balance off in full each month and only charging what you can afford to pay off each month.

Further helping you because if you settle your outstanding balance each month and considering if you signed up for the right credit card. Then you’ll benefit from a rewards credit card, earning air miles or cashback from day-to-day purchases making your credit card more than just a handy and safer alternative to carrying around cash.