When it comes to owning a credit card, much of the responsibility revolves around acknowledging the fact that everything you purchase needs to be paid back. When you start charging products or service to your card, you are accumulating a debt balance.
This balance will start incurring monthly payments that you must pay on time after receiving your credit card statement.
In many ways, owning a credit card is like taking out a loan, in other ways it is easy to fall into certain pitfalls. There are two things you really do not want to do with a credit card. Firstly, is to miss your payments. If you miss payments, then you will be in danger of entering credit card default and subject to drastically increased interest rates.
The rates go up because failing to make payments marks you as a high risk individual to be loaned to. As you might expect, this will affect your credit rating as well when you try to get lines of credit elsewhere. You can typically return to good standing by making payments on time for several consecutive months.
Charging Too Much
Just because you can buy lots of nice things using a credit card doesn’t mean that you should go overboard with it. Remember that everything you buy must be paid back. If you reach the card credit limits then not only will the card not be available when you really need it but you will also be paying back large chunks of money back for a long time.
Remember that the longer debts are held on a card, the more interest is going to accumulate for you to have to pay back. A much wiser approach is to use a credit card when necessary and to pay everything back within a few months or before the next statement period to avoid accumulating an unmanageable debt.
Think twice about the things you really need to purchase. Credit cards are an excellent tool in your arsenal for making it through society with a good shopping experience but they need to be treated with care.
If you pay your credit card bills on time and carefully watch how much money you are putting on the card, then your wallet will thank you in the long run.