Credit: A responsibility that can lead to great benefits
Hardly even a day passes without people getting offers for credit in their mailboxes. Meanwhile they might seem attractive, does not necessarily mean that people should jump at them every time a new credit card is being offered. You might not just be putting yourself up for a dumb debt. But you could also even be impacting negatively in the existing credit that you are already having on your own.
Your budget is no joke and you simply should not be playing with it. That extra debt that people is acquiring can they really afford it? It is simply common sense question to ask among consumers. Credit companies do not really care if you have the money to pay but users have to be on their feet and act responsible, because an unpaid debt can lead to way too many more trouble than the small satisfaction given at the moment of spending dumb money.
Some changes in finances are totally foreseeable. Like people might have an idea on when are they retiring, or in how many years kids are going to college. Or an adjustable rate home equity loan that at some certain point is going to go into full repayment. Those things are foreseeable. Therefore keep them in mind at the moment of acting about before acquiring new debs. Is not about being any kind of genius or super human, is just about being considerate to our reality at the moment of making an important decision. And not getting ourselves into a serious trouble for something so naïve as not being aware of your own steps.
People should ask if any kind of payment on a debt acquired will take more than three years to pay back. Because simply if a debt takes more than three years to pay, best is to consider not to do it. Because if it takes that long to pay simply is better to accept that it is a bit out of reach and you are in no way near in a financial condition to acquire that debt.
New credit to pay old debts?
New Credit card accounts are not really helpful to solve debts because if you are using a credit card to pay another credit card all it is that you are doing is actually drowning yourself in more debts. Yes, is that simple, plus using your cards too much, all it is going to do is affect the real potential of your cards because they are all filled with open credit lines per closure instead of using them to grow more credit and have real credit for something else in the future that really matters.
Banks know this, being the reason why, somebody who is using borrowed money to pay money that owes, then trying to convince the source when he really needs new money. is simply an absolute deal breaker. More does not always means better, people should be reminded of this more often. Better to only have a couple cards well used than fifteen cards impossible to manage.
Having too many cards is also incredibly hurtful to people’s bank history without them even knowing it. Day by day, the people with so many credit cards are not able to pay them off. They are accepting an unbearable challenge of managing that amount of credit cards, and payments. Simply being impossible leading back, to bad credit. Not only that. But, the history, of closing cards is only showing the other person at the other end of the desk unreliability. Which has never look good on a record sheet to get a loan.
Honesty comes better when accepting the challenge of being a grown up. Then, pulling off tricks of juggling money. Facing reality, banks consider people according to their stories and simply there are people who should not use a credit card.
For people who manage their cards responsibly, the obvious answer is a yes. They enjoy the security and convenience of credit cards, while knowing their limits they use them for helpful perks and even earning rewards. But for some other kind of people credit cards, is nothing but the beginning of all things to end in their finances for various numbers of reasons.
If you belong to the group of people who waits to pay their phone or Internet service bill until their service is cut off? And you are also a person who does not pay attention to your credit card bills? The beginning of the consequences at the very start will include larger fees for being late, high penalties to be managed in interest rates, and dumb damage to your credit history. And with damaged credit, then your consequences will bring enormous troubles to your regular life trying to qualify for a home mortgage, a loan or even an apartment rental. If you act like this, please do not bother yourself with credit cards. All they are going to do for you is give you is a lot of headaches.
Also if you belong in the group of tight budget people is also best to rationalize in additional credit card charge. After a couple of meals, and necessary things for the month this people can end up with a severe case of bill shocking at the end of the month. Young adults on tight budgets need to keep their spending within their resources. Unfortunately, credit cards are a great way for people with tight budgets not to emancipate in any way but to go beyond their savings and obtain crippling debts that can take years to overcome.
People who is enthusiastic, with no money. When most responsible people receive their monthly statement, they immediately look to their balance. On the other hand, some users of the reward credit cards have like an obsession more on the points, and miles, or cash back that they earn from spending, than in the real money that they have. These guys to earn additional rewards, make dumb purchases. Conscious or subconsciously they do it. Of course, rewards earned will add up a small fraction of what is charged in interest, but is it really worth it?
Credit card users who constantly, and routinely carry a negative balance on their credit card. Just to pay for regular expenses. First mistake said before. A debt is not paid with another debt.
Credit cards are deceptively simple to make purchases with, but they take time and patience to use responsibly. Sadly, there are many users whom, for one reason or another, do not seem to bother to learn exactly how this acquired service of credit cards work. They seem to float around not understanding how interest charges are being applied to his or her account, or how cash advances to work or even basically learn how to avoid themselves being victims of fraudulent charges.
It is also important to remind general population of simple rules. Certain items work better for certain kind of customer just like clothing. In this case credit cards. Sometimes is not what you need and is not what looks good on you. If you belong in the group of persons with bad credit, a reward credit card simply will be harder to qualify for you, and you may be simply better off looking for a regular credit card you can pay monthly on time.
Credit indeed is a responsibility that can lead to great benefits
Everyone “knows” that having bad credit can stop you from getting a mortgage, a credit card, or other loan. But additionally of hurting you financially, debts can damage you profoundly, in all aspects of your life.
Being Smart with money sometimes, or most of the times does not have to do anything related with money itself. It is strictly related with responsibility. Often when people do not have the service of asking the bank for money, they turn to their loved ones and closest friends to bail them out. While being late on a credit card payment will damage your credit rating. It is not merely compared to failing on a promise to loved one the destruction of a relationship is wreckage that not many can deal with easily. Well… The same thing happens when you do not pay the bank. This can severely destroy your life, just in a different way.
Bad credit has a terrible impact on marriages. Financial disagreements have even become a predictor of divorce in our society even more than sexual disagreements. And, talk about kicking you when you are down. Meanwhile you are divorcing the credit score can be used as leverage when dividing up assets.
Simply not moving right can lead to a total Lack of Access to Emergency Money. Unfortunately, being outsourced means you could be vulnerable to a medical catastrophe. Or Limited Mobility! God forbids a natural catastrophe but the case with them is that they occur, and if they happen better to have credit to use at the time of need, instead of needing it and not having it.
While this seemingly will sound snobbish, Airplane tickets cannot be bought with cash homesickness and the desire to go home is a universal feeling. Having a low credit rating can keep you from what you need to get where you want to be, or you need to be which is even sadder. With the right rewards card, people save thousands of dollars using mileage points to purchase tickets and accommodations, avoiding foreign services of fees and purchases. Poor credit can also stop you from acquiring an asset like a car to name something, which in another turn can also keep you from taking jobs that require a car.
Like exposed earlier it is going to be hard to find a mortgage with bad credit, and that is sad but the saddest part is the difficulty renting! Property owners, check the credit score of their possible new tenants to not rent them if not viable.
Remember that every purchase you have ever made with a credit card is a loan. When you spend money from your card, you do not have money. You are actually borrowing that money with the intention of giving it back in the future meaning that you are going to be able to do so. It is a common practice and acceptable throughout society but poses serious threats to every person with a credit card. The accessibility to credit makes the options of spending money easy.
Credit is NOT your friend please remember that, it can be an allied, but is NOT your friend you always pay more to spend money that is not even yours. Therefore, the cost of any purchase made with credit is always going to be greater than the original due to interest, as will the cost to your personal well-being which must go head to head with how to repay the debt that was just accepted.
A tip on how to be a Smart user would be…
Pay off your cards! Even thought this is the most obvious thing to say, and kind of tacky for not revealing anything new it is also the most difficult do in which most people fail, and a lot. A credit card is money that you do not have, asked to somebody who is NOT a friend while being the most suitable solution to avoid falling deeply into debt. Sometimes is the hardest solution to complete because you are accepting the challenge of paying money that you do not have. Yet, you will be seemingly amused also by how many people are available to pay off their cards, yes. They can pay off their cards, but do not. Being that the only problem of their debts, release yourself from dumb debts, the debts are not a huge monster if you take on them one at a time. This may not the amusing part of your credit card journey, but are definitely the words needed to be spoken to ensure your happy road to be with nice credit.