I have a few helpful tips that might help you avoid anymore more credit
card problems in the future. Some of these tips are based on my own
experiences, and some are based on what other experts have said in the
past.
1) Did you know that you can use your
credit card to pay your mortgage or rent? However, that does not mean
that is a good idea. This is one idea that is good in theory, but not in
practice.
Some of you might be in a bit of cash slump. However, using a card with a
high limit is not going to help you either. What happens when you
cannot pay the amount you charged in full right away? They will add some
extra fees to your card. That $500 payment you made at the beginning of
the month is going to double by the next month. You might have a $4500
limit, but that is not helping your case.
You can burn through the $4500 limit with just 2-3 payments, including
the extra fees. To make matter worse, that is going to hit your credit
score. You might earn some gold stars for paying on time, but those
stars will fade once you cannot afford to pay the full $4500 in full.
2)
Some of you might use your card for small purchases. They recommend you
do that for building credit and earning points or rewards. You may have
earned the free airline miles, but you now have a balance that higher
than you expected. Using your card for small purchases here and there
adds up. You may even get to a point where you have a balance too high
to recover.
I have been there. I know how you feel.
That is why you need to be careful when and how you pay for the "small
purchases." They add up over time. You are going to have a hard time
paying it down unless you have an extra $10,000 lying around your home.
3)
Taking out a cash advance against your own accounts is another option
that appears to be good in theory, but is, once more, bad in practice.
You are essentially borrowing against yourself. You have to repay that
money back to your account. Some people might say, "I can handle it",
but they come to realize how grossly mistaken they are.
You could be subjected to high fees and interest rates, depending on how much of an advance you take out.
I am sure some of you have heard of those payday loans, including
Amscot. They make it appear attractive on the surface, but it is
anything but. They expect to be paid back on time and in full. It is the
same way a cash advance works. Think twice before you do something like
that.
4) What happens when you do not have the
money to pay for those medical bills? You can use a credit card, but,
once more, that decision should be weighed carefully. Do you have a
credit card that charges a high rate every time you use it, regardless
of how large or small?
A bill that starts at $300 can easily go up to $650. Once more, it
depends on the taxes on the medical bill and the interest rates on your
card, but it will still be expensive. Think twice before you do it,
especially if you have a limited income. You can find other ways.
5)
Some college kids like the idea of using their card to pay for
everything, including books. It might be a short-term fix to a long-term
issue, but the issue is still there.
The interest might keep you from paying it down. You can also add in the
2 or 3% fee your card charges you for the convenience. They do add that
convenience charge in there. A bill of $40 for books could go as high
as $100 when everything is done.
Find another way to make the payments. Talk to someone in the financial aid department. That is why they are there.
6)
Do you want to pay for your new car with your credit card? You can earn
some major points. The only downside is that you will be stuck with a
high balance. That high balance will get higher depending on the
incurred interest rates and extra fees.
Conclusion
I am equally as guilty of making bad money choices with cards. Some lessons I have had to learn the hard way. We are all a work in progress. We can learn how to make better choices together.