Before You Get Credit
April 14, 2008
With the economy shifts, the problems with getting enough to sustain us and other money problems is what most would think is an easy solution - put it on plastic. Even though most of us are trying to build our credit and are using credit cards as a means of survival, you may want to start thinking before you spend and start driving your debt up.
The number one rule that anyone who is spending money on a credit card should know is related to the ability to pay. Credit cards may seem convenient enough with the capacity to make a minimum payment on the budget that you are on. However, you never want to make just the minimum payment. This is designed to only let you pay off the interest of the card, which will always be rising and will never allow you to actually pay off the card. If you have a minimum payment box, pay at least twice as much as what it says. This way, you are actually paying something off instead of paying the creditors for giving you the bill.
If you want to keep your credit on the good side, don’t get into a credit card that you can’t handle. This always is related to APR. I’ve seen some APRs as high as 25%. Even 7-10% is a little too high. If you start falling behind, it can kill your pocket book, cause the minimum payment to raise, and put you in a complete hole, where you can’t pay off the debt. If you have to get a credit card, make sure the APR is extremely low.
Even more than this, check out the hidden fees. They are always there and are always being tagged on. Even though credit cards come with a ten page manual, all in fine print, read it all before you get involved. Not doing so can be detrimental in the long run, especially if you are trying to build credit on your record. There are hundreds of ways that credit card companies are trying to get your money. If you are going to be paying them, make sure you know what for and why.
The sound advice is to make sure you know exactly what you are going to be using before you do, otherwise it is a lot of money down the drain. With almost any credit card, the design is to keep you paying for 10 - 20 years on various things that are detrimental to you in order to have convenience of being able to get what you need. The motto to follow is, before you swipe, know what you sign.
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