Most people use credit cards to buy just about everything these days. It's not uncommon to see people buying food or shopping for clothes using credit cards - it's commonplace these days. "Charge it!" has become the favorite expression of card users, and is heard in shops, dining places, and just about anywhere purchases are being made.
Why not? Who does not want to use credit cards? Easy to use, these sleekly-designed cards can be used to buy practically everything in commercial establishments regardless of how much (or little) money one has in his or her wallet. Short of cash and hungry? No groceries? Going to a party but have no money to buy that dress you've been dying to have?
No problem! Your good ol' credit card can care of that for you.
Credit Cards: Not Free Money
But wait. A credit card shopping spree may be fun, but that doesn't free you from the responsibility of paying the expenses you incurred from using your credit card. Credit cards, after all, are interest loans in disguise - they are not free money. Typical credit cards charge a number of fees for the right to use the card, including:
- A finance charge, which is an interest charge for any unpaid portion of your monthly bill;
- An annual membership fee in many cases;
- Or if you're paying after the deadline, there is also a late payment fee which could have a higher interest rate.
It is a fact that many credit-card holders face credit-related problems. Poor purchasing decisions, lack of information on credit card fees, and disregard for upcoming credit card payments are among the reasons why many credit-card users are often hard-pressed to pay their debts. Some are not even able to pay for the actual purchases they made, just barely managing to pay minimum payments on their credit card purchases.
Don't get drowned in a sea of debt, here are some tips to help you manage your credit:
- Be credit savvy. Applying for a credit card means you are ready to assume the responsibility for paying your credit. You, as the credit card holder, and only you - not your parents, spouse, or whoever - is responsible for that.
- Use your credit cards wisely and sparingly. Remember: Paying for purchases using credit cards are more expensive than using cash or checks, unless you pay your balance in full each month. Credit payments include interest and other fees, if you carry a balance. Use credit cards only when necessary. If you really need to use credit cards, carry only the cards that you will actually use.
- Use credit only if you are sure you can repay it. Paying your debt on a credit card using another credit card does not count.
- Avoid impulse shopping on your credit card. It's not free money!
- Use credit for money emergencies only, or for major purchases that will last a long time.
- Seek credit counseling if you see financial problems on the horizon.
Tag: avoid credit card problems and pitfalls
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