Some people think having a credit card means spending freely with out any control. They do not bother to check their budget. But beware blindly using your credit card can leave you badly burned.
Most of us think credit cards are perfect solution for practically living paycheck to paycheck. We are available with funds whenever we want but there is a downside to having the ability to buy whatever you want, whenever you want.
If you are unable to pay your credit card bill, little fees for things like late payments and going over your credit limit and on top the interest will lead your balance to balloon size. You will be carrying load of debt the rest of your life if not able to clear you debt as early as possible.
Credit card interest is variable and can change unlike the fixed interest associated with savings accounts. Mostly credit card interest rates are higher at any time. On some cards if you miss a payment you might be charged high APR. On some cards bank give low APR as introductory offer but when this period is over the interest will probably be double. If your balance goes above your credit limit then also credit cards give problem.
It ‘s not that having a credit card only leads to problems it have positive points also. It can proof to be a useful tool in several situations like booking travel, paying for gas at the pump and shopping online. You also get additional benefits on credit cards like reward points and purchase protection plans.
If you want to build credit score especially when you are taking credit card for the first time then credit cards can help you in building a credit score. This helps when you want to borrow larger amounts of money to buy a car or home. This "score" is determined by one of three companies -- Equifax, Trans Union or Experian -- and basically tells a creditor how likely you are to pay back a loan on time. Use your credit card responsibly this will prove you’re worthy to creditors and will help you in getting loan easily.
Many people have ruined their lives by not paying their credit bills on time and have trapped into credit card debt. Not paying bills means you can no longer make the minimum payment therefore you’ll have to declare bankruptcy. Remember one thing bankruptcy show on your records for 7 to 10 years and you’ll find you are very limited in what you can do simple things like renting an apartment or insuring a car will become more difficult.
Make credit card your great companion from which you can get many benefits, but be smart to stay on top of your payments. Don’t let credit card become problem for your for rest of your life.
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