Credit cards aren’t destructive, nor are they out to get you. In fact, they can do you—and your credit score—a lot of good. If so, why are so many people bogged down by debt? By making unwise decisions about their finances, that’s how.
If you are new to the idea of owning a plastic friend, here are some pointers to keep in mind:
1. Be responsible.
– Having a credit card means having a certain amount of purchasing power at your fingertips, as symbolized by that little plastic card. As we all know from the Spiderman comics and films, with great power comes great responsibility. Make sure you things you need, or for emergencies. Use cash or debit cards as much as you can. It would be a better idea if you just save up for items that are beyond your means, or to abandon the idea of buying it altogether.
2. It’s not free money.
– Having a credit card is no excuse to spend money freely. When you buy anything by charging it your card, you are basically just borrowing the money from the card company. Remember, you still have to pay for it at the end of the month, so be sure you’re spending less than what you can afford to pay at the end of the month.
3. Pay the full amount on time, every time.
– One way the credit card companies make their mega-bucks is through charging you interest. They also charge you extra for late fees, finance charges, and other penalties for one thing or another. Don’t give them this opportunity to make more money off you. Instead, make it a habit to pay your credit card balance in full and on time every month, and this will be a great note in your credit history.
But what if you’re already neck-deep in credit card debt, and sinking fast? One of the first things you should do is to discuss your current circumstances with your credit card provider. If you are currently facing hard times, like termination or illness, you can ask your credit card provider if you can avail of any hardship plan they have in place, in which they allow you to stop payment for at least six months to a year. Because chances are you have other financial obligations crowding your plate, you can also go through credit counseling and get advice on how to manage your financial issues. Typically, debt management is available for many debtors in trouble, where your representative can negotiate payment terms with your creditors. In some cases, a debt consolidation loan can work to your advantage, as it means getting a big loan to fulfill all your outstanding debts.