Credit Cards Are Not Evil

Credit cards aren't evil, nor are they out to get you

. In fact, they can work in your favor, and are a great tool for improving your credit score. If so, why are so many people bogged down by credit card debt? By not handling their finances wisely, that's how.

If you've recently gotten a credit card or planning to apply for one, here are three things you should know before flashing plastic:

1. Be responsible.

- When handled correctly, a credit card is a powerful purchasing tool. As we all know from the Spiderman comics and films, with great power comes great responsibility. Take charge of your finances by distinguishing between needs and wants, and satisfying only the former. Stick to your budget and limit your spending with cash or debit cards. It would be a better idea if you just save up for items that are beyond your means, or to abandon the idea of buying it altogether.

2. It's not free money.

- Having a credit card is no excuse to splurge. When you buy anything by charging it your card, you are basically just borrowing the cash from the card company. Remember, you still have to pay for it at the end of the month, so be sure you're spending less than what you can afford to pay at the end of the month.

3. Pay the full amount on time, every time.

- Credit card companies earn money by charging you interest on the balance on your credit card. They also charge you extra for late fees, finance charges, and other charges for one thing or another. Don't give them this opportunity to make more money off you. Instead, ensure that you pay your credit card balance in full and on time every month, and this will be an excellent note in your credit history.

But what if you're already neck-deep in credit card debt, and sinking fast? One of the first things you should do is to discuss your situation with your credit card provider. If you are currently facing hard times, like termination or illness, you can ask your credit card provider if you can avail of any hardship plan they have in place, in which they allow you to defer payment for at least six months to a year. Because chances are you have other financial obligations crowding your plate, you can also begin credit counseling and get advice on how to manage your financial issues. Typically, debt management is available for many debtors in trouble, where your representative can mediate with your creditors. If possible, a debt consolidation loan can cover all your debts with one big loan to pay them off.

by: Mark Dawson

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