How many times have you whipped out that plastic credit card and immediately thought better of using it at that very moment?
Everyone knows the scoop about credit cards: they’re bad, or at least that’s the blanket statement that follows those cards.
The truth is credit cards, for the most part, should be ignored and only used under two circumstances: if you absolutely have an emergency and have no other recourse or if you’re using it to build credit but are able to pay off the amount immediately, so as to not keep paying interest on the card itself.
The average individual has about $15,000 in unsecured credit card debt, a number that while might not look all that ominous suggests that we still aren’t quite sure how to use credit and that there are certain situations where you should never use a credit card, no matter how tempted you might be to do so.
For instance, if you’re in need of a loan, you never want to go the route of a cash advance from a credit card. That is only going to lead you to believe you have more money then you actually do but also an interest rate that centers on convenience for you but more so for the credit card company who’s likely to be flirting with the 20 to 25 percent mark as far as the rate is concerned.
Using credit cards or borrowing money from a lender should also never be used to pay bills with, since that’s even less than a lateral move (which some view as it being a no big deal, sort of endeavor). Paying for items like utility bills or groceries with credit cards is only going to set you further back as far as being able to save and also pay off what you owe.
The bigger issue is if you can’t afford groceries or your bills in general and you have to resort to credit cards, you’re budgeting or lack thereof should come into question right away.
Credit cards only should be part of the equation when you know that you have a plan in place to pay them off in some reasonable amount of time. If you get zero percent interest on a six month deal, then have it paid off in that time frame. The same goes for those trying to build credit and want to charge here and there, sporadically, and then pay if off immediately when the first and subsequent bills come.
Credit isn’t all bad. It can be used, managed and then paid accordingly to build your score in the eye of a lender but anything short of a flawless, thought out path is going to leave you clawing and grasping to stay financially competent moving forward.
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