No matter your age, occupation, or status, it is important to know about credit cards and the effects they can have on your finances. Yes, credit cards are convenient with their “buy now – pay later” incentive, but without careful use they could spiral you into debt! According to an article from Fox Business, there are six important lessons you should learn before obtaining your first, or an additional credit card.
- Credit cards are borrowed money – The money spent on a credit card is not limitless – it will eventually have to be repaid. Advisors agree that the best rule to follow to avoid overspending is to never make purchases on your credit card unless you can pay them off at the end of the month.
- It is not free – Banks charge money by way of interest and fees to use their credit cards. Before opening a credit card, look around for the one with the lowest interest rate.
- Banks are in business – Remember that banks aren’t there to tell you when and when not to use a credit card. They hope that users will spend more money and pay more interest. To prevent excessive use, take out one card and use it only when necessary.
- Scrutinize the fine print – Read the fine print and ask questions if you are confused. Here is some of the information you want to look for: yearly fees, balance transfers, online payments and late fees.
- Don’t seek happiness at the mall – Don’t use credit cards for your retail therapy. Although cards offer instant gratification for material things, you will not be so happy when you see the bill at the end of the month!
- Be responsible – The most important rule is to pay your bill on time. Your personal payment history will be sent to credit reporting agencies. Your payments now will determine your credit score which impacts how much credit you can obtain in the future.
Click here for the entire article from Fox Business. Do you have any other tips for credit card users? Comment below!