How often have you seen someone going through their wallet trying to find a credit card in the checkout line- and were shocked by the true number of cards they had in their wallet? Credit cards can be used as a form of identification when applying for a major purchase, or when renting a car; and they can be used for convenient purchases after you buy them that you won’t have to pay for until a month.
Except, that is not exactly how it often takes place. Typically, individuals who have a good amount of bank cards use them often, and have to transport a stability from one to the next because they are unable to pay each card off in full when the bills come in month. So what happens then? Credit card holders are being charged high interest rates for every of the purchases, sometimes up to 24%! charge cards are practice forming. It’s very simple to pull out a piece of plastic, swipe it through the register and buy something you couldn’t afford otherwise. It’s tempting to think that the money will come later on, and you should pay for it then. More often than not, the bills are far more compared to the cash you have later on to pay them with. A report in 1999 revealed that consumers in America utilized charge cards to charge over $1.2 trillion.
Despite having this type of negative use, credit cards, whenever used correctly, are a terrific source of financial convenience. The trick is to not over indulge yourself when they are used by you.
It’s also helpful to keep just a few credit cards available to you at once. Even if you receive a new credit card offer in the mail every day, you should stick to having a general use credit card (one that can be used for any kind of purchase), and one for emergencies. An emergency credit card allows you the peace of mind of knowing if an unexpected expense comes up that you have to pay, but don’t have the extra money available to pay it, you at least have a backup in the form of a credit card that will allow you to pay for it.
Using a general use credit card should be done with extreme discipline. Select one that offers rewards, cash back or other features that you can benefit from. Make your weekly purchases on your general use credit card, from gasoline to groceries, and keep track of your purchases you are using on the card so you know how much money. That way, you will know whenever you’ve reached your investing limit for every single based on the amount you have budgeted for such purchases week. Set aside money from your paycheck each week for your credit card. As soon as the bill comes in the mail, immediately deliver out the check for the FULL AMOUNT. This avoids finance charges, but has allowed you to earn interest on the money for the full month in your bank account prior to mailing the payment that you kept it!
You are going to benefit greatly from the rewards programs and interest free purchasing power you get when you pay off your balance each month in full when you use a credit card for your every day purchases with the discipline required to keep your spending in check. You are able to keep higher amounts of money in your bank accounts for longer periods of time, allowing the money to earn a little interest before the credit card repayment is due. Additionally you are building a good credit score by simply making acquisitions and spending them down every month, and can help you when it’s time for you to apply for a home loan or large loan for a fresh vehicle or motorboat or other high ticket item.