Managing Your Credit Cards Responsibly
Credit cards can easily go from being your best friend to your worst enemy. If your credit is any good at all, you probably get a ton of pre-approval notices from different companies. They?re offering you the world in a credit card ? no APR, huge credit limits, awesome purchase bonuses and more. And then you see the teeny tiny fine print at the bottom of the offer and you realize that as always, things might be a bit too good to be true.
Credit card companies think up great offers to get you to apply for their credit cards, knowing full well that the rules and regulations are so complex that most people will mess up at some point or another. Either they?ll miss a payment, pay late, go over their limit, etc. and BAM! Suddenly your interest rate goes sky high.
Of course, if you?re one of the more responsible credit card users, you?ve never missed a payment, or paid late, you keep a low balance on the credit card and you pay off your purchases each month, then you?re golden! Until you get that notice in the mail saying there?s a change in the APR across the board for all users. And suddenly all of your good behavior through the years still results in an 18.99% interest rate.
And that is exactly why credit cards are a tricky financial tool to use. They?re great for emergencies, or a big expense you can?t manage to pay off in one sum, and of course it?s nice to have a bit of a buffer between your available assets. But no matter what credit cards are good for, you have to realize that the financial institutions backing the card are businesses ? and they?re in to make money.
Avoiding credit card issues is a simple matter of avoiding credit cards all together. Of course, that?s not always feasible for people, since credit cards can be a useful tool and help build your credit score. If you absolutely must have a credit card, it?s important to at least go about getting one the right way.
And as with any financial decision, step one is always research. Research your own credit history and score (which can affect the interest rates you?re offered) and sift through all the credit card offers you?ve received. Typically the thing to look for is a low APR, or zero APR to start and then a fair APR after 6-12 months.
Once you?ve found an offer that looks good to you, call the company and get more details, ask questions, etc. Especially if there is something in the terms and conditions you don?t understand. Be blunt and honest with the representative ? ask them straight out what mistakes you might make that you?d get penalized for with the credit card company. Their job is to provide you with all the info you need to make a decision, so take advantage of that.
Last but not least, try and keep your credit limit as low as possible. High limits lead to high temptations that might make you bite off more than you can chew in credit card purchases. If the company gives you a high limit, ask them to lower it to something reasonable. It?s much easier to avoid debt from credit cards in the first place than try to pay it back once the damage is done.
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