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Actually getting the credit that
you need can be much easier than maintaining it. In fact, there’s probably not
a week that
goes by without receiving a
credit card offer in the mail, and online you’ll most likely also be bombarded
with offers.
Shops, both in the mall and on
the net, are usually extremely quick to give you an immediate discount on your
purchase if you sign up for their credit card. While that extra 10% off is
tempting, if you sign up for it then pretty soon you’ll end up with yet
another credit card bill coming through your door.
One of the main problems with
credit cards is that when you’re spending on it, you don’t seem to realize
how much you have spent until the statement comes through at the end of the
month. Since you’re not actually counting those dollars leaving your wallet,
it’s can be very easy to underestimate the impact of a swipe here and a swipe
there.
Credit cards were never meant to
be a substitute for budgeting. No matter how easy it was to spend the money,
there’s always going to be that day of reckoning when your bill comes through
and you have to make your payment. Making the minimum payment will keep you from
getting late fees, but it won’t make much difference to your balance if you
have been out spending a lot.
If you didn’t charge another
nickel on your card, how long would it take to pay off the balance? That’s a
question you need to ask yourself, and don’t make the mistake of getting a
second, third or fourth credit card just to transfer the balances, you still
have to pay the money at some time!
Balance transfer is a great way
to move higher interest debt to a lower interest card, however, it’s not meant
to be used to shuffle your money around like a shell game. Nowadays, the
majority of Americans have many how credit cards than they need.
As the major cards are accepted
practically everywhere, you really only need one or two credit cards. Having a
smaller amount of credit cards makes it easier to keep track of the balances on
them, rather than on six or even eight as many people have to.
Should you be short of money, you
can get a cash advance from your card, which is like an immediate loan. The only
problem is, it’s that whilst it’s no hassle to get, it is probably the most
expensive form of finance out there. The easy access to cash from ATMs makes it
simple to get ten bucks for lunch, fifty bucks for shopping and twenty-five
bucks for movie ticket for you and your spouse.
That’s $85 in one day you’ve
just spent! Imagine if you repeated this once a week, your debt will skyrocket
in a few months. The price for your easy access cash can be at the credit card
rates of 24% and up. The rewards and bonuses may sound tempting, but you will
most likely find that getting a credit card with a better APR (Annual Percentage
Rate) and no annual fee is worth a lot more in the long run than the freebies
that you might not use even if you earned them.
Using credit cards is the easiest
and fastest way towards establishing a good credit history. The problem is that misuse
of credit cards absolutely destroys your credit rating. When you need to buy a
car or want to purchase a home, that credit rating will suddenly become
extremely important to you.
Every careless shopping spree,
every cash advance, every late payment - is factored into that credit rating. If
you’re going to use credit cards, treat it like cash and only charge what you
can afford to pay. Otherwise, you cheat yourself out of the credit rating you
need in the future for really important purchases, and make it much harder for
yourself in the long run.
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