Getting a Credit Card What to Avoid

When you apply for a credit card you will find that the credit card company will give you a predetermined credit level. If this is your first credit card then the temptation might be to go on a spending spree and make sure you spend every last cent on your card. The first thing you need to remember is the credit card company is lending you that money, it doesn't belong to you. At some point you will have to pay it back plus all the interest due. Credit cards can seem attractive when they show 0% interest but be careful that you don't miss a payment, or make the payment even one day after it is due, because then you will be charged interest, normally at very high rates. There are times when you will need a credit card, when you pre-book a hotel room, hire a car are just two examples.

But for most people the advantage of a credit card is that they see financial freedom to shop and buy what they want; when they want, especially if they don't have the ready cash to pay for the goods. Credit card companies work on a 30 day cycle and if the money you spend on your card is repaid in that time, then there is no interest to be paid. But the majority of people don't repay their credit card each month, and then find they have large amounts of interest to pay. They see the payment due is a very small amount of the whole debt and will often only pay that amount.

What started out as a small debt now can take years to clear, if it is ever cleared. If you want to use your credit card as a short term loan then you either need to pay it off quickly or go to a bank and ask for a loan from them. The interest rates from the bank will be far lower than the interest rates on a credit card.

You might have started to receive a pre-approved credit card in the mail, and you are tempted to take up the offer. Before you do, make sure you read very carefully all the details in the small print. It is small because people won't bother to read it, but that will tell you how generous the company really is being. You might think they are being generous until you see how high the interest rate is, and what their annual charges are.

The best rate credit cards are given to those with good credit rating, but that can be a problem if you are just starting out to use credit. You need to get a good credit rating, and one way is to use a credit card. If you can only obtain a high interest credit card, then it is worth getting it, if it will improve your credit rating.

Make sure you spend within your budget. Use it for purchases that you would normally pay cash for and when the monthly statement comes in, pay the balance off. That way you show yourself as a responsible customer and have incurred no interest fees.

You need to be in control of your credit card, and not let your credit card control you. If you are wise in your use of your credit card then you will remain in control of your finances, and not be concerned about getting into major debt. If you do not control your spending then you will soon be heading to a downward spiral of debt that you might never get out of.

Lloyd Lopes is the co-owner of a general Credit Cards website. Read more about Credit Cards and thier use.

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