Credit cards get a bad rap these days. With millions of Americans struggling to pay off high-interest debts, is it any wonder they look at credit cards as the enemy? Despite the negative attitudes held by many, 78% of U.S. households own at least one credit card.
The fact is, credit cards CAN be dangerous if you don’t use them correctly. In the past, credit card companies targeted college freshmen, offering them free t-shirts and water bottles to sign up for cards. At 18 years old, most people aren’t ready to use credit the right way – instead, they treat it like free money. When the bill comes at the end of the month, they’re shocked by how much they owe.
Once a person misuses one credit card, they’re likely to apply for (and misuse) multiple cards. Eventually, they owe more in minimum payments than they are able to make, and they may default on their credit agreements. This can have disastrous effects on finances, credit scores, and even relationships.
With all the issues associated with credit card use, why would anyone in their right mind want one? Believe it or not, there are ways to use credit without all the negative consequences. You just need to take precautions to make sure you don’t end up on the wrong end of the spectrum when it comes to credit card use.
Understand the terms of use for each card. Do you know the interest rate you’ll pay on your credit cards if you don’t pay them off each month? What about the payment due date? If you aren’t mindful of the rules associated with your cards, you could violate them without even knowing it, leading to fees.
Pay off your cards each month. Unless you have a flat tire or other real emergency, only use your cards to purchase what you can pay off at the end of the month. You can build a strong credit history by using credit for everyday expenses – but only if you refrain from spending the money you’ll need to pay off the balance.
Find the best credit cards for you. There are thousands of websites that help you compare credit card deals. Keep an eye out for interest rates, annual fees, and other potential fees, looking for the card with the lowest cost of use. Also, look for cards that offer rewards, such as airline miles, cash back, or points you can trade in for gift cards.
If you follow these guidelines, you can learn to use credit cards without incurring debt, and you can even earn benefits along the way.
