subject: How You Can Make Credit Cards Work For You [print this page] The credit card industry is a maze of false information and misleading assumptions. Because of this, it is not surprising to find many people whose credit scores have been completely ruined because of their lack of sufficient knowledge on how the credit card industry really operates. Hence, individuals particularly first-time credit card owners are advised to take time to learn all the credit card terms and charges. They are also urged to reasonably examine themselves if they can cope with the obligations of owning a credit card. Lack of information and being overly self-indulgent are the two main ingredients to having long-term credit challenges.
Credit cards are also the stepping stone to building a good credit report. Thus, there are good and bad reasons for applying for credit cards. Knowing your motive will determine whether you are going in the right direction or if you are bargaining for more than you could handle. By doing this, you can steer clear of making significant financial blunders.
Reasons for Getting Credit Cards that Can Lead to Money Difficulty
In case you are applying for a credit card so that you can spend the money that you don't have or which you are yet to earn, you may have stop and rethink this unhealthy outlook on credit. Regardless that credit cards have become popular because they allow people to "buy now and pay later", such payment method have led to bankruptcies for a large number of people.
Huge credit card debts nearly always begin with missing just a few payments. However, outstanding balances and fees increase to the level that card owners resort to applying for another credit card, then another credit card to transfer their balance and have a brief respite against interest charges. This practice may badly affect your credit score and create even more financial hardships for you in the long-run. You need to consider that missed credit monthly payments will be reflected or kept active in your credit profile for several years. Hence, a few missed payments a year can accummulate and harm your credit score. In the future, when you badly need a loan, these past due payments (which you could have worked harder to prevent) will harm your chances of acquiring a loan---whether for emergencies or business purposes.
The Sensible Reason
One of the smart decisions you can make when it comes to credit cards is to make use of them mainly to develop a good credit score. There's no better place to begin than getting a credit card with a good APR or annual interest rate and a sufficient amount of credit card limit. Possessing a credit card allows you to enjoy several things for instance, purchase stuff over the internet; pay for the essentials such as groceries and food when you're in a money pinch; and get various other things more conveniently and more safely than when using cash. However, the major consideration for owning a credit card should be to establish credit and not simply just convenience in making purchases. Before you can apply for a card with a higher borrowing limit, credit card companies will need to have something to look at to evaluate whether or not you are creditworthy. A credit card with a higher credit limit more than what you already have may need at the very least 6 months of good payment history.
Before applying for your 1st charge card, it is also important to know that somebody is keeping records of your credit card payments. Credit card companies send reports concerning your payments to credit bureaus. Reap the rewards of having a good credit score by being savvy about your credit card spending and not ordering anything you do not have the means to pay for on or before the grace period or payment deadlines. Be smart and practical about your use of credit cards.
