Why a Credit Card Isn't Such a Risky Thing
Friday, 28 January 2011
In the current economic climate it can be easy to think that a credit card is a pretty risky thing to own. The temptation to over-spend on luxury items can often be a little too much; however, there are ways and means to make a credit card work for you.
In life, you never know when things might take a turn for the worse; maybe your car will finally pack in or perhaps you might face a hefty, unexpected bill. Credit cards can often soften the blow for just enough time for you to make adjustments and organise your finances.
Temptation, though, to use borrowed cash to pay for a pricey evening out may sometimes get the better of you. So, here are a few tips to stop you getting in such a pickle.
Try to only sign up for credit cards with 0% interest rate on purchases. Some will extend up to around 12 months before you will have to pay market interest rates. You will not be liable to pay any interest rates if you ensure that you have paid the outstanding balance in the 12-month period.
Ensure you keep your card in a safe place, away from temptation. Some people choose to keep theirs in a safe, well away from their wallet. This makes using the card difficult, unless a person has specifically planned for it.
Try to only use your card once a month, but on the same thing. For example, maybe you regularly buy your shopping on your credit card and pay it off the following month. The reason this is important is two-fold. Firstly, it ensures that the credit card is being used; some companies withdraw cards if they are not active. Secondly, it maintains a good credit rating and people who have done this from a young age without missing a payment are more likely to be approved for large loans or mortgages.
Furthermore, some cards actually reward those who regularly pay off their balance, too. Some issuers offer as much as 5% cashback, though these are often the same companies that will charge hefty interest rates to those that fail to pay on time.
Recent extensions in balance transfers can also help those suffering from their current debts. Transferring your current credit card balance over can allow you time to find the money at no further interest. With organisations offering up to 17 months to clear your balance, it could really be a lifesaver.
If you're not really sure where to turn to find the best card for you though, make sure you check out price comparison websites. Not every card provider is listed, but it will always give you a general idea of what sort of prices the market has to offer.
Try not to confuse store cards with credit cards. Many high street retailers will draw in prospective customers with their 'buy now, pay later' adverts. However, the interest rate on these cards is often exceptionally high and debt can quickly stack up should they be over-used.
Perhaps you have never got a credit card before though as you feared over-spending? Most card companies have differing limits on the amount you can spend and for those that don't want that temptation burning a hole in their pocket, perhaps a lower end limit at around £250 would do.
If you are a bit worried about your credit rating, applying for a card could have a negative effect. If an application is rejected it may only further hamper your rating, so before applying for anything, make sure you use the net to find out whether you would be likely to accepted in the first place.
Once you have found your new card make sure you read the small print carefully. It can take just 10 minutes, but may save you a lifetime of problems. Some companies may charge you for non-use of the card and others an annual fee just for the privilege.
It can be a headache making sure you have made the right choice with your card supplier, but such a simple task can offer vast rewards. The assurance of cash when needed can often save what would be a problematic situation, whether it is an emergency or just a few extra pennies at Christmas.
Just ensure that you are vigilant of misleading deals and choose carefully before committing to a decision. A credit card can be a fine thing, but some may suffer at the hands of a bad deal. Read wisely, follow this advice and enjoy a prosperous future.
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