Should I Consider a Credit Card?
Credit cards can be incredibly useful; all through high school I had one with a small ($500) limit that I was to use “for gas only.” Now, needless to say, my family taught me very few money management skills. I abused that credit card and several others into my adulthood.
Credit cards are a finicky subject for a lot of people. Some people say you should get one to establish credit; others shun them off entirely. So, here are some tips and tricks for choosing whether or not you should get a credit card, and if so, then what you should be looking at.
The first question you should ask yourself is why you’re getting the credit card. Is it for a specific purpose? Is it only for emergencies? Or is it merely so that you can just get something that you want right now instead of waiting until you have the cash? Make sure your reasoning is the right reasoning; if it is more based in materialism than necessity, you may want to reconsider getting a credit card at all.
One of the most important factors to look at is the interest rate. Interest rates will make or break you. Some companies charge as much as 25% interest. Some companies will also offer 0% interest for a certain amount of time. You should ALWAYS read the fine print and see how long these periods are for. Although they may look like a good deal on the outside, further reading may show you something a little different.
While we’re talking about reading the fine print, have you checked to see if the credit card that you’re looking at has any hidden costs or fees? Some credit cards make you pay a certain fee monthly or annually. You may be getting roped in to something you’re not ready for.
Let’s look at the big issue next. Have you asked yourself if you can afford the monthly payments or, even better, can you pay more than the minimum? Can you afford another bill, or will it burden you to have that other bill? I ask if you can pay more than the minimum because that is incredibly important when looking at credit cards. If you only pay the minimum, you can pay up to twice as much of the original charge if you aren’t careful.
These are just a few things to think about when considering a credit card. The average American is at least $5,000 in credit card debt, because Americans allow their spending to get out of control and don’t keep track of what they are spending.
Have you considered a credit card in the past year? Why did (or didn’t!) you end up getting it? What other things should be considered when thinking about applying for a credit card? Leave your thoughts in the comments, have a great weekend, and until next week, spend smart, save smart!
