Using Credit And Credit Cards Responsibly

Credit cards have landed many in hot water financially with seemingly no way out except for drastic measures such as bankruptcy. Using credit must be done responsibly to avoid such issues. Credit can be either a friend or an enemy and it is up to the consumer to which end of the spectrum they desire to be.

Before selecting a credit card it is a good idea to consider interest rates. Interest rates are the amount of money you will pay back above and beyond your initial purchase, and the lower the rate the less money you will owe on your balance. The credit card fee schedule can be found on the application and will give you a good indication as to how much they are charging to extend credit to you.

Read the terms and conditions of each card you may want to apply for, this is important because many times consumers find themselves in financial turmoil later when the extra fees begin adding up on the bill and they get further and further behind with payments and do not understand why. The main culprit behind consumer credit problems is late fees charged by the credit card companies. Make sure that you understand the payment schedule and make your payments on time to avoid these excess fees.

Try to pay more than the minimum payment if possible. By paying more than the minimum payment or paying off the balance each month when it is due will reduce or eliminate many of the finance charges tacked on to your bill. When we pay only the minimum amount due, the finance charges really do add up and we end up paying more for our purchases than initially planned for.

Organizing you debts will allow you to better handle your finances. Makes sure that you keep them all in one place and have receipts and cancelled checks so you know how much you are paying out each month on credit compared to your income. This will allow you to get an idea of how long it will take you to pay down the debt or eventually pay it off.

Do not spend more than you have in available cash. This is important, because credit cards are so easy to use; many consumers find that they are making trivial purchases with their credit cards for everyday items that could be paid for in cash. If your credit card bills begin to exceed your actual income, this is where the trouble begins. Only use your cards in cases of an emergency when cash is not readily available and make sure that when the bill comes due to try to pay it off.

Applying for more credit than is needed will eventually hurt you more than it will help you. Having too much credit and several different cards in your wallet are not necessary and will only tempt you into using them more often than you should. Lenders like to see that you have some credit, but if you have extended yourself too much they will look at your debts compared to your income and may not be so willing to give you loans.

Responsible use of credit can create a lifestyle that we can only imagine. Getting educated about credit is a wise choice and there are organizations available that can help consumers understand credit and how to use it. In today’s economy credit is important and maintaining a good record will go a long way in helping us achieve success.