Posts Tagged responsible credit card use

Sabotaging Your Own Credit Card Use

June 1st, 2009

headacheSome people, for one reason or another, seem to unwittingly sabotage their own finances.  I’m pretty sure you’ve seen it – folks who seem to do exactly the wrong things when it comes to wisely looking after their financial success.

Look at many people’s credit card behaviors and you can see what we’re talking about.  In fact, the reality that so many people are experiencing major problems with credit cards doesn’t surprise me at all – the signs have been glaringly noticeable from the start.

Credit cards are intended as a financial convenience, not a source of liquid funds or a comfortable loan.  Having a credit card doesn’t mean you can finally afford a 50-inch TV which you couldn’t possibly handle paying for before.  It doesn’t mean you can take vacations that are well beyond what you can pay for.  Simply put, it doesn’t give you permission to consume items conspicuously.

As a society, we really do have to start looking at credit cards in a healthier manner.  Instead of thinking of all the things you can purchase using your credit balance, focus your attention on how much easier credit cards can make your usual purchases.  Rather than having to carry cash every time you leave the house, you can simply bring your credit card along and know that you can pay for any expenses that you need.  At the end of the month, the same amount of money that you would have spent should go into settling the amount you incurred on the card, instead of letting the debt pile up.

Any other way of using credit cards, unless carefully planned for, usually leads to self-sabotage your financial capabilities.  Don’t let the tempting allure of “buy now, worry later” suck you in.  Use your credit card responsibly.

Responsible Credit Use: Good For You And Everyone Else

March 31st, 2009

money1Responsible use, ultimately, is what separates those who benefit from credit cards and those who fall victim to its failings.  Credit cards, after all, are just an available tool.  Whether it serves you or hurts you depends on how you exercise its capabilities.

There are two types of credit card users.  The first one are the diligent types, who pay off their monthly debts in full and refuse to carry a balance.  If you’re one of these, congratulations.  This type of habit allows you to use your credit cards, reap some great benefits (points, cash back, convenience, etc) and remain relatively debt-free.

The second type of user is the type who carries a balance.  Whether they have their cards maxed out or just have half of it continuously used up, they’re the people from whom credit cards earn their multi-million business from.  They’re the ones affected by steep interest rates, late charges and a whole host of other fees.  Ironically, they’re also usually the ones who derive the most benefit from their cards, able to stretch credit to serve them for longer periods.  If they’re using the expenses to invest in a business or anything else that potentially appreciates in value, they could be end up ahead in the end.

Here’s where things really get tricky.  While the first type of credit card user doesn’t really get the most value out of their card, they’re also never in danger of over-stretching their financial capacity.  As such, they rarely get in trouble when emergencies and problems throw their budgets out of balance.

The second type, however, are the ones who end up in a credit mess.  When you have a large revolving balance and exigencies happen, you’ll always end up defaulting on one or two payments that can really cost you big.  Even worse, large-enough financial difficulties can leave you unable to settle your debts.

Ideally, all credit card users should be like the first type.  Sure, credit card companies won’t be making as much.  Yet, it’s still the best thing overall for our economy.   Can you imagine losing your job in this current financial climate with a revolving balance in tow?  I really hope we’re all learning something from the current state of finances the world is in.

Credit Card For High School Kids

March 20th, 2009

If you thought this was a modern urban legend, rest assured it isn’t.  High school kids below 18 years of age can now get and use student credit cards under their name.

highschoolcreditIt’s true.  Credit card companies, looking for new markets to expand in, are now actively pursuing high school juniors and seniors as new credit card customers.

Parent Should Take Notice

If you’re a parent and hadn’t known till now, it’s time you took a close look.  Your kid may already be deep in debt without you even knowing it!  Even if they don’t fall into the debt trap this early, credit card use at an age where they are impressionable and (for the most part) financially unprepared can create destructive habits that can haunt them towards the later years of their lives.

High School Credit Cards Are Widespread

According to surveys across several states, as many as 1/3 of all junior and senior students have at least one credit card.  Unless they are accessory cards from parents who can monitor and discipline their spending habits, these kids are, for the most part, left to fend for themselves with a serious financial instrument in their pocket.

Do You Know What Your Children Are Paying For?

When your kids have their own credit cards, they are likely paying for all sorts of items without your knowledge.  While the danger of buying things they can’t afford is an obvious issue, an even bigger problem is their newfound ability to purchase medical treatment and drugstore purchases without a parent’s knowledge.

Educating Your Children

Proper education in responsible credit card use is a necessity now, more than ever, especially if this trend persists.  Don’t wait till its too late before you equip your children with the financial knowledge that can guide them through the rest of their lives.