Credit Cards: Should You Get One - How to Choose and How to Use Credit Cards Wisely

Should You Get a Credit Card?

There’s no denying it, we are bombarded with offers from credit card companies, who are offering various incentives all the time, and even if you don’t have the best of credit you can still expect to see an offer or two in your mail. But the truths of these offers, most of which are written in fine print, are the hidden fees coupled with high interest rates and rules that can change at the creditor’s desire. Yet, it’s hard to resist a credit card when the offer looks good, and that brings up the one truth that isn’t in fine print, which is the need for self-responsibility. Consequently it is important to know that there is far more to getting a credit card than just filling out a card offer application that needs to be considered, starting with those ugly little truths in and out of the fine print.

Credit Card Downfalls

Having a credit card requires a lot of responsibility. As you may have seen on TV the handful of get out of credit card debt commercials, you can imagine how easy it can be to overuse one. The thought of being able to buy things and not having to actually pay for them until later is very tempting to so many people, and quickly becomes one of the main reasons why there is too much individual debt which leads to defaulted credit cards, and higher bankruptcy rates. This is where self-responsibility comes into play, as you must be able to take responsibility over your spending habits in order to prevent overspending, and it alone should be the reason why you decide whether to get a credit card or not.

Credit Card Fees, Fees, and You Guessed It, More Fees

Those credit card companies don’t mess around when it comes to the fee revenues that they can generate off of you, and if you’re not careful, you may get attacked with a comprehensive assortment of old and new fees, ranging from annual percentage rates (APR) to rewards-based fees. The fees charged by the credit card companies are a main influence in the decision in choosing between the countless credit cards that are available. Therefore you will have to do some homework and read through all the fine print of the offers available to see which credit offer is right for you.

To Charge it on Your Credit Card or Not To Charge; That is the Question

These days just about every product or service can be paid with a credit card. This has made purchasing products and services much more convenient to the point that you don’t even have to leave your house. However, the decision to using credit cards should not be based on the convenience, especially if it is the convenience of not having to pay any money until later. Credit cards, like loans, allow you to build up a credit history which can either add to, or take from your credit score. Just as more and more can be purchased with a credit card, your credit history and score is becoming more vital not only in making purchases but also in regards to education, employment and housing opportunities. With that said, it is pretty obvious that the decision to purchase with a credit card is not one that should be made light of.

Quick Tips to Using Your Credit Card

A little preparation can enable you to accept those enticing credit offers without the fear of digging yourself into a financial black hole. If this is your first card or your zillionth card, the first thing you need to do is look at your budget. Make a simple ledger or spreadsheet that lists your monthly net income as well as your outgoing bills to form a budget. You have to pay for food, power, water, heat, and housing before you pay for credit cards. If you make any purchases on the card, you need to make sure that you can pay them off each month. As most credit cards may have a revolving credit, if the balance is not paid, not only does it carry over to the next month, but there is an interest rate that can range from 12-30% of that balance that is added to your balance to make the total amount due. If the debt lingers from cycle to cycle, interest payments will make that purchase cost more than it was worth. A great way to ensure that you are able to pay off the balance each month is to treat your credit card as if it were a debit card. Every time you use your credit card subtract the amount from your monthly budget, hints the idea of treating it like a debit card.

You can choose to use your credit card for emergency purposes only, but if you are looking to improve your credit score through the use of your card, using it this way will not help you build your score very fast. If your monthly expenses leave you with very little wiggle room, you might want to avoid using your card except in emergencies. Though if you follow the tip in the above paragraph faithfully, (there’s that self-responsibility again) you can use your credit card to improve your credit score even if you have very little wiggle room in your budget. You can do this by following your budget precisely, while using your credit card to purchase your necessities, such as food, gas, etc., all the while subtracting the expenses from your budget balance.

What if You’ve Already Accumulated a Heap of Debt?

If this is your situation, you need to start fixing it right away. Call your creditors to explain your situation, and see what they can do to help. Some lenders will grant forbearance for a month or so, while others will accept partial payments. Make a good faith effort to take care of your debt by paying more than the minimum amount due, and establish a relationship with your debtors. Make sure they have current contact information, but don’t put them through the trouble of calling you first, they can’t help you with any kind of payment agreement unless they know you need help. Instead, be proactive. Let lenders know when you face financial hardship. If you get in touch with them, they’ll know that you care about paying off your debt - and they will be more likely to work out some kind of deal with you.

No Such Thing as Free Money

These simple strategies - being self responsible, knowing the fine print for those credit card applications so that you can make an informed choice, knowing when to charge it, preparing a budget, and contacting debtor to work on debt can be put to use by anyone who has, or is thinking of obtaining a credit card, or is trying to improve their credit score. Credit cards aren’t free money. Spend only what you can afford to spend, and stay in touch with your creditors if problems arise.

Copyright © 01/04/2011 by A.K. Love (dragnhaze)

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