Avoiding The Perils Of First Credit Card Hazards
FIRST TIME JITTERS?
Avoiding The Perils Of First Credit Card Hazards
Copyright 2005 Money and Credit Info
Pre-approved credit card applications are a dime a dozen these days, and often, they present themselves even when you’re not asking. Just check your spam filtered box. You’re sure to find many of these pre-approved applications there, even when you’re credit rating has just suffered a fatal blow! This is because many companies seek to capitalize on people experiencing bouts with financial woes, which have increased in number the past few years.
It’s so easy to fall into credit card problems. Having the liberty of buying what you want at any given time is a very seductive option. That is, until the bills come rushing in. The credit card companies know how to make it very tempting to fall back on any good habits we’ve created and just spend away. It’s hard to get away from, but we have to resist temptation.
When establishing good credit, one of the things we’re told to do is to get a credit card and then use it to spend wisely. Experts advise us to pay our bills on time and not to exceed the credit limit. However, no one really talks to us when we get that first card about how easily and quickly we hit that limit, or how easy it is to miss that first monthly payment. Once you get behind, it can be really hard to catch up. Oftentimes, credit cards come with introductory interest rates that are nothing or very low. But many times, those rates soon change and you can find yourself with a full balance on your card with an 18 or 20 percent interest rate! That interest rate can then put you over your limit, if your not paying at least the minimum payment, now making you susceptible to over-the-limit fees. Before you know it, you are getting bad reports on your credit reports for credit card debt on a card that you haven’t even had very long.
Sadly, there are times when we have no recourse but to resort to credit cards. During periods of financial difficulties, credit cards have become our way to escape those mounting bills. If there is any kind of pattern like this in your credit card spending, it can fill up your credit reports pretty quickly. When you are not making your payments, the credit card companies do inquiries to verify your address or other information. Every time someone makes an inquiry on your credit report, it makes you look like even more of a high risk, further worsening your credit report. All the credit card debt on your report, even if some of it is good, can make you look high risk for car loans or mortgages – especially if any of those cards hold high balances. Even worse, that bad credit report can keep you from renting an apartment or getting a job that requires a background check.
You could choose to use debit cards instead, to avoid having to succumb to the temptations of credit card spending. But if you feel that credit cards offer more latitude, especially during emergencies, then be wary of how much you spend. In the end, you’ll thank yourself for avoiding a deeper hole that would be difficult to overcome.
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