subject: Todd's Pros and Cons Of Credit Card Ownership [print this page]
Credit card have dominated commerce since their introduction. In today's world, everyone has some sort of plastic in their wallet. Be it a debit or a credit card. Even high school and college students have a credit card to use. However, people need to remember that a credit card can be a great source when needed for an emergency or it can get you into a lot of financial trouble.
Plastic can definitely be convenient and easy to use for many happy shoppers these days. A credit card gives anyone the ability to go out and make a purchase without having to pay for it immediately. Going out shopping these days is easily facilitated with a credit card. More importantly, credit card can help us out of a bind in case of an emergency. No need to pay for restaurants and purchases up front with a credit card. However, with all these benefits comes a very high amount of risk. Someone who does not properly control spending will end up with a huge bill without the ability to it.
Charge cards are well known for their ease of use, however, they are also just as well known for their high interest rates. Some card companies may even charge interest rates that exceed 15%, even 18%. A $100 purchase at an 18% annual interest rate will end up paying $18 on interest alone if that debt is left unpaid. Keep making more purchases without paying and start adding up compound interest and your bill will quickly get out of control. Interest charges and fees can quickly rack up a credit card bill within in a few short months. Serious debt problems may occur because interest rates and fees will quickly add up.
Interest rates are not the only fees that go along with having a credit card. Charge card companies are famous for charging late penalties, annual fees, balance transfer fees, transaction fees, foreign currency conversion fees, etc, etc. All these fees will also quickly add more money to your credit card balance in a heartbeat. In no time you will be paying more fees and interest than what you originally charged.
In order to avoid all these financially deadly fees it is always important to use your credit card for emergencies only and pay for your purchases immediately at the end of the month. It is crucial to pay your bill in full every month on time in order to avoid penalties and interest charges. All these additional fees will start to add up if they are not addressed each month.
First time credit card holders such as college students should try to learn good habits when first starting out in the credit world. It is not wise to use your charge card to go out drinking with friends or eating out at restaurants when you should be eating at home. Only use your credit card when you are absolutely certain that you will be able to pay for it at months end.
It is not wise to carry more than one credit card with you if you are a multi card holder. Only use one primary card when it is absolutely needed the most. Take note of all terms and conditions before signing up for any credit card as well. Make note and write down in a place you will remember all your due dates. Lastly, take control of your own credit destiny. Use your card wisely, remember, having a credit card, is not a license to spend.
