The current financial system has made it difficult for the average earner to afford things outright, so credit has become a natural method of buying items beyond your means, especially in a monetary system that is built around the concept of debt. Credit cards give people an opportunity to spend what they don’t have, whether it’s to enhance your lifestyle or for essential purchases, and occasionally offers the luxury of borrowing with no cost if you use them cleverly. You can even earn cashback and get rewards for spending on your card, but without the correct discipline it is likely you will be forced to pay a lot of interest and rack up debts that you can’t pay off. This article will outline the pros and cons of getting a credit card, and explain correct ways of utilizing them.
If you need to buy something expensive but can’t afford to pay for it immediately, credit cards are a fantastic way to pay for something all in one go, though it is important to adopt a level of sensibility to avoid paying over the top in interest. Your best option is to use a 0% purchase credit card, which allows you to pay for an item in full then spread the cost over several months by making a series of payments to clear the outstanding amount. When using a credit card of this nature, it is important to use careful planning to ensure you can pay the total amount owed before the end of the interest free-period, and if you commit to a feasible repayment plan then you won’t be charged any more than you’ve borrowed. It is important to be aware of paying a penalty in the form of interest if you miss the deadline, and this will be charged in the form of interest added to your balance at the end of each month.
The Consumer Credit Act protect Users when they use credit cards, where if all goes wrong you are ensured to get your money back. This is for instances such as if the company goes bankrupt, your product is faulty, or it simply doesn’t turn up. Here you won’t lose out because you are entitled to claim your money back from the credit card provider, creating a certain level of assurance that delivers peace of mind. There is also an additional level of security that protects users from fraudulent transactions, where providers are willing to refund money that is stolen when it isn’t a result of your own negligence.
Borrow For Free
There are multiple credit cards on offer which allow people to pay 0% interest on the money they borrow, meaning you are essentially getting an interest-free loan. It is important to remember that you need to make minimum monthly payments and clear your balance before the 0% offer ends, but overall this is considerably better than the hefty 18% average interest rate that is attached to most credit cards.
The Debt Trap
A credit card is a form of borrowing, so it is important to constantly remember what you are owed and when you need to pay it by, and be especially aware of how much you can afford to pay back and use pre-planning to cover yourself and mitigate risks. If you fail to pay your balance in full each month, you will start to rack up interest, and debt can quickly spiral out of control if you can’t afford to pay the minimum monthly amount. It is therefore important to pay more than the monthly minimum and think of your credit card as a short-term borrowing facility, and take advantage of credit card calculators to reconfigure your monthly repayment amount.
Interest rates aren’t the only costs associated with credit cards, fees will often be charged if you are late making monthly payments, and there is also a penalty to pay if you exceed your credit limit, underlining the importance of keeping track of your spending and paying your bill on time.
Charge for Withdrawals
It is important to be aware of the charge for withdrawing cash on credit cards, which is typically around 2%, and the lack of an interest-free period on cash withdrawals means withdrawing cash is ill-advised.
I hope you have found this article insightful, and if you require a helpful CreditRepair.com review then do visit the website for your own benefit.
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Posted by Yanira Farray on 3:29 pm, With 0 Reads, Filed under Economy, Personal Finance. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.