What exactly is your credit card balance doing each month? If it's going up, you're most likely guilty of credit card abuse. If, on the other hand, it's going down (or better yet, you don't have a balance at all) then you can be reasonably sure that you're handling your credit cards in a responsible manner.
What Are You Buying?
Another thing you have to ask yourself is, what do you use your credit cards for? If you use them only for emergency purposes, the chances of credit card abuse are slim to none. If, however, you're charging up lattes like there's no tomorrow and you can't pay your balance at the end of the month, you are indeed guilty of abusing your credit cards.
Think paying interest on a $3 latte is no big deal? If you're running a balance on your credit cards, that $3 latte can cost you a lot more in the long run -- especially when you're buying one a day. Over a few short years, your debt can go up by a couple thousand dollars on lattes alone. No matter how good that latte is, don't ever buy it if you can't afford to pay cash.
How Are Your Payments Going?
When your credit card bill comes in, how much do you pay each month? If you're only paying the minimum and you're at your wits end trying to make your budget accommodate your debt, you're probably guilty of credit card abuse.
You should never pay only the minimum monthly payment when it comes to credit cards. If you do, you'll likely be paying them off well into retirement. Instead, pay off as much as you possibly can. Try to keep a goal of having all debt paid off within one year. If that's not possible, credit counseling may be in order.
Remember, the economy isn't at its best. Right now we need to make sure we're as financially secure as possible. Credit card abuse is going to be the one thing that prevents you from doing that, so make sure you're using your credit cards responsibly and that abuse isn't a deciding factor in the outcome of your financial future.
A credit card enables the consumer to borrow money from the issuer to purchase a particular product or avail some kind of services. It is used in place of cash as majority of people find it a convenient and safer mode of financial transactions. A pre-decided limit is allotted to the user who can avail a credit up to that amount and pay as per his or her comfort level combined with the amount of the interest charged by the issuer of the credit card.
The promoters of credit cards state that credit card assists you in times of need when you might need a particular product or service but are falling short of adequate cash, which is correct to a great extent. Different credit card companies offer different credit card schemes and credit limit as per the credit rating and financial stability of the customer.
Credit cards enable their issuers to earn financial gains in the form of interchange fees, interest rates and annual fees. In addition to this there are late payment charges, financial transactions made in terms of a foreign currency and exceeding the prescribed credit limit by the user. Some individuals though find it awkward to pay fixed annual fees even if they do not use their credit card the entire year.
It might be hard to avail an unsecured credit card where there is no requirement to pay an initial security deposit to the credit card issuer. However, companies opt for a safer mode of secured credit cards so that they don't end up in loss if the customer fails to pay back the credit amount on any pretext. It is argued by critics that credit cards open the doors for frauds by the use of stolen credit card.
Before selecting a credit card that can be beneficial for your daily transactions you need to make sure that the credit offers the following:
- A lower rate as compared to its competitors.
- Look out for hidden costs and the grace period limit offered.
- Opt for a credit card that matches your requirement criteria. For instance, if you are more involved in traveling go for a travel insurance credit card.
- Due to the increased competition in this industry, the credit card companies offer many benefits like rebates, discounts, car insurances, accident insurance and warranty coverages to their users.
Both Sean Masterson & Joseph Then are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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