They are our flexible friends and, at the same time, our worst nightmares. They let us buy the things we want then make us pay the bills we cant afford. Credit cards have an important role to play in our daily lives, however, if you don’t use them wisely, they can be your worst enemy.
Before we look at the Do’s and Dont’s of credit cards, lets look at their history. Credit cards were introduced as early as the eighteenth century. They came about when a furniture dealer decided to grant payments to those people who could not afford to purchase products upfront.
This method gained popularity throughout the nineteenth century and in 1914, a wire service company WU introduced credit notes which let customers defer their payments. Within a few years, other companies issued their own cards that allowed consumers to pay for goods and services on credit.
Franklin National Bank of New York issued the first modern day credit cards. These credit cards were plastic and allowed access to the cardholder’s financial information.
If you use a credit card wisely you can get many benefits such as cash back, bonus points and airline miles. Using a credit card wisely will also help you get better credit score which is invaluable if you wish to take out credit in the future.
To make sure your credit card works for you, you should pay off your entire outstanding balance each month. If you don’t do this you can get into a spiral of paying interest on top of interest and never paying off the original debt.
You should always ensure that your payments are paid by the due date. Late fees can range from between $20 – $40 and missing a payment will usually be recorded on your credit file. On top of this many credit card companies will increase interest rates due to too many late payments. If you are unable to pay your balance in full, then you should try to slow down your credit card spending. Take time and have a careful look at how much you earn each month and how much you spend. If you find yourself in this situation, it may be worth drawing up a budget.
Reward cards that offer the world should also be carefully studied. These reward credit cards typically come with a higher rate of interest which rarely makes up for any potential rewards.
Another huge “no no” with credit cards is credit card checks. Stay away from these checks at all costs. Many credit card companies send these to customer in the mail without any prior request from the customer. These checks work out to be very costly and don’t provide the protection you get when using your credit card.
Credit card companies in the US offer many different types of credit cards. They will try and lure you in with promises of low interest, rewards or balance transfer offers. Be sure to read the full terms of these offers as they, sometimes, are not as good as they seem. For example if you’re doing a balance transfer to a new card you should find out how much the credit card company will charge for the privilege. These fees can run into hundred’s of dollars depending on the size of your balance transfer.
If you have a good credit history, you should try and negotiate a lower interest rate on your credit card. Contact them and advise them that you are weighing up your options. If you are a good customer they will, more often than not, offer you some further benefits. It does no harm to ask, and you may be pleasantly surprised at what they have to offer.
As you can see there are many ways to make a credit card work for you and if you stay away from making the minimum payments each month and try and keep your balance low, these credit cards can be an important part of our lifestyle and are very handy in-case of emergencies or unforeseen bills. Its when we start putting everyday expenses such as groceries and clothing on them that problems may occur.