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Credit cards can be your best friend or your worst enemy. I’ve seen people build their credit and earn free travel rewards, while others end up drowning in high-interest debt. The difference is knowing the facts. Here are some key things about credit cards that could save you a huge amount of money and stress.

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1. Your credit utilization ratio matters more than you think

You’ve probably heard that your credit score is important, but did you know that your credit utilization ratio — how much of your available credit you’re using — makes up 30% of your FICO® Score? If you’re maxing out your cards, your score is likely taking a hit. A good rule of thumb is to keep your balance under 30% of your limit, but if you really want to see your score climb, aim for 10% or less.

2. Carrying a balance won’t help your credit score

I used to think that leaving a small balance on my credit card would boost my credit score. Turns out, that’s a total myth. The truth is, paying your balance in full each month not only keeps your credit healthy, but also saves you from paying unnecessary interest. If you can’t pay it off completely, at least make more than the minimum payment to avoid getting stuck in a cycle of debt.

3. Credit card interest adds up fast — really fast

Ever wonder why credit card debt is so hard to pay off? It’s all because of high interest rates. The average credit card APR is 16% to 25%, which means that if you carry a balance, you’re paying way more than you borrowed. If you have a $5,000 balance at 20% APR, only making minimum payments could mean paying thousands in interest over time. Ouch.

4. You might be missing out on free perks

Most people don’t realize how many perks their credit cards offer. The best credit cards offer free travel insurance, extended warranties, purchase protection, and even free subscription trials. Before you buy that extended warranty or pay extra for trip insurance, check your credit card benefits — you might already be covered.

5. Applying for too many cards can hurt your score

I get it — credit card sign-up bonuses are tempting. But applying for too many cards in a short time can lower your score because of hard inquiries. If you’re planning a big purchase like a home or car, hold off on multiple credit applications to keep your score in good shape.

6. Not all rewards cards are worth it

I used to think all rewards credit cards were great, but not all of them are as good as they seem. Some cards devalue their points over time or have complicated redemption rules. Before signing up, make sure the rewards actually fit your spending habits and that you’re not paying a huge annual fee for benefits you won’t use.

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7. Closing old credit cards can lower your score

I once made the mistake of closing an old credit card I wasn’t using. When you close a card, you reduce your total available credit, which can increase your credit utilization ratio and hurt your score. If you don’t want to use an old card, consider keeping it open with a small recurring charge to maintain your credit history — just be sure you’re not also paying an annual fee for the card.

8. 0% intro APR offers can be a lifesaver — if you use them right

A 0% intro APR offer can be a great way to pay down debt or finance a big purchase without interest. But be careful — if you don’t pay off the balance before the promotional period ends, you could get hit with sky-high interest rates. Read the fine print before you jump in.

You are in control

Credit cards can either work for you or against you — it all comes down to how you use them. Pay attention to your utilization, pay off your balance when you can, and take advantage of the perks that come with your card. A little knowledge can go a long way in keeping your finances on track.

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