Most people will have a credit card at some point in their lives. While some will inevitably mishandle these lines of credit and ruin their credit-worthiness for a very long time, others will enjoy many great benefits from their “plastic”. This guide will serve as a brief overview to give you the basic low-down on credit cards.
Why Do I Need a Credit Card?
While some, who have first handedly watched others ruin their credit with credit cards, will advise you to never have a credit card; it is often a necessary part of building a good credit history for large purchases, such as a home or vehicle.
If you have had a past of mishandling your finances or you know that you are not ready to handle the responsibility of monthly payments, then you should NOT get a credit card. If you do, you should try getting one with a very low credit limit and see how well you are able to make your payments.
Credit cards are important in establishing a good credit history because you will need some kind of credit past to get a loan for a large purchase. These are purchases that most people intend to make at some point in their lives and are also purchases that one would not be able to finance on their own. For example, when the time comes for you to buy your own home, you will need a mortgage. Most mortgage companies will not easily give a loan to someone who has no credit history.
Choosing the Right Credit Card
It is also wise to choose your credit cards carefully. Some companies will charge you an arm and a leg in interest rates, while other will be fairly affordable. Read all terms and conditions on each card, and compare them with others, before you choose the line of credit that is right for you.
Additionally, there are specialty credit cards that will try to appeal to a particular interest you may have by offering rewards. For example, some clothing and department stores offer Visas and MasterCards that can be used anywhere and will give you a special discount or promotion for that particular store once you have charged a certain amount of money to the card. Finding one of these cards can help you save some cash if it is a store that you shop at often.
Being Smart About Your Card
If and when you decide to get a credit card, it is important that you remain smart about the purchases you make. Don’t charge too much or buy things that you really don’t need just because you have the card at your disposal. You also need to keep in mind what you can afford to pay on your card(s) each month and how much a purchase will cost you in interest if you only make minimum monthly payments.
Following these important rules will help you learn how to effectively manage the credit line that has been given to you, so you don’t fall into the credit card debt trap and inevitably ruin your chance to have a home of your own some day.