Credit Cards aren’t for everyone
Credit cards are a means of purchasing something without handing over cash. They are a convenience when used properly….and they can be a curse if not. They can be a financial nightmare.
The convenience is that a card is handier than cash. Or you’re making a purchase of something ‘on sale’, and don’t have the cash with you. They are a curse when you don’t pay it before the due date or don’t have the full amount to pay it, adding a late fee as well as interest charges on the remaining balance, thus wiping out the ‘on sale’ amount. Before you slide the chip in, ask yourself “Is the money there to pay for it”? – “Do I really need this?” If the answer is no, put the item back, and walk away.
Keeping up with paying for purchases made in full and on time adds points to your Credit Score. Something you need to do to stay in good standing with creditors. Your score is a link to your credit history – how you pay off your debt. A score in the excellent range can get you a lower interest rate on a loan, or a house/apartment over someone else with a lower score than yours. Your credit score follows you throughout your life, and if you’re ‘a couple’, the score of your ‘other half’ is factored in to yours. It’s why it’s imperative that you talk finances and have all debt paid off, for both, before you say “I do”. Their financial mess is yours, and vice versa.
Credit cards are not to be used carelessly. Until, and only if you are disciplined enough to pay in full for purchases when the bill comes due, do not use them. Do not open one.
Do your homework before you open a credit card. Some have an annual fee, so watch out for that…..there are a wide variety that are free. Each come with their own features – many with rewards. Unless you can use their type of rewards, pass on that one, and look for another. Read the material and ask questions before you open one. If you don’t follow the guidelines —- it can cost you plenty. And if you don’t pay in full and on time each month, adding purchases on top of those already there, and still paying only the minimum, turns into a financial hole that can take years to climb out of.
Do not put another person on your credit card. Don’t be tempted with ‘their’ extra points to get you travel benefits or whatever the rewards are. They will all be wiped clean if the other person doesn’t pay for the purchases he/she has made, both in full and before the due date….and their credit score is linked to yours because of this card.
We often pull out the credit card, swipe it, and forget about the purchase, only to be shocked at the balance at month’s end. We open the bill, stare at the balance, and think, “that can’t be right’. So, during the month, call the Customer Service number on the back of the card, they’ll ask a question or two and then give the balance as of that day. Get used to checking on this at least twice a month, so if you’re getting close to what you can pay when the bill comes due, you can stop using the card so you won’t overbuy. This will prevent surprises when the bill comes in, as well as not being able to pay it in full resulting in interest charges on the unpaid balance next month.
Be credit card savvy.