subject: Understanding Responsible Use Of Credit And Credit Cards [print this page] Credit is a wonderful tool to have and use, however it is also a double edged sword and cuts both ways. Used irresponsibly it can cause financial ruin, if used responsibly it can be our greatest asset. Credit cards especially should be used with care. They can help us obtain things that would otherwise be unavailable to us if we had to pay cash for them. Credit is definitely a necessity in our society today.
When you are in the market for a credit card, the first thing you will want to consider is the interest rate on the card and other fees associated with it. Try to select a card with a low interest rate. Also, make sure to check the fee schedule included with the application to find out how much interest the company charges for late fees and over the limit fees and any other charges.
The terms and conditions of each credit card are important and consumers can avoid many hassles if they just read the terms and conditions. Late fees are usually the cause of many consumers getting behind in their payments. Understanding the payment and fee schedule will help you two avoid late payments and to make your payments on time.
Pay more than the minimum payment each month on your credit card bill to avoid excessive interest charges. This is the key to maintaining good credit and being responsible with it, by paying more than the minimum you will not only pay the balance off faster, but you will be establishing a good credit history and improving your overall score. Consumers who pay only the minimum payment due will wind up paying far more for their purchases than expected and it could take years to pay off the balance on the cards.
Organizing you debts will allow you to better handle your finances. Makes sure that you keep them all in one place and have receipts and cancelled checks so you know how much you are paying out each month on credit compared to your income. This will allow you to get an idea of how long it will take you to pay down the debt or eventually pay it off.
Spending more on credit than is necessary can also end up costing you more money than you may have available. It is easy to purchase things on credit but difficult to repay the debt, just keep that concept in mind each time you are tempted to pay for minor purchases with a card instead of cash. If the item is something you use everyday, pay cash for it instead to avoid maxing out your cards.
Applying for more credit than is needed will eventually hurt you more than it will help you. Having too much credit and several different cards in your wallet are not necessary and will only tempt you into using them more often than you should. Lenders like to see that you have some credit, but if you have extended yourself too much they will look at your debts compared to your income and may not be so willing to give you loans.
Being responsible with credit will take you far and afford you the opportunity to purchase the finer things in life such as the home of your dreams or the car of your dreams. Credit education is readily available to anyone who wants to learn what it is for and what it can do. Consulting with a professional financial advisor or debt management firm can go a long way in helping you to establish and maintain good credit.
