Mega Credit Cards

Obtaining a credit card is fairly easy and if used the right way you won’t get into debt. Credit Cards can pay your bills, college tuition and the next vacation. What you do not want is to be a slave to your credit card.

Principal #1

Only buy something which you planned for in advance and have the money to cover the credit card in the bank when the bill arrives. This allows you to basically take out an interest free loan for a month while your money collects interest in the bank. However, this takes discipline and planning.

Principal #2

Never use the credit card to pay off another credit card. This will only set you up for big time debt and future financial worries.

Principal # 3

Choose a credit card that does not have a yearly fee and gives you air mileage. I like to pay the card off each month and collect air miles at the same time. As a result I have gotten a free trip to Tahiti and Europe. It always feels good when get free stuff without paying a dime in interest. You need to try to convert everything that you usually pay cash into a credit card. This allows you to take advantage of borrowing someone else’s money. However, you also must be responsible and when the time comes have the money to pay off the credit card in full.

Principal # 4

Use the credit card responsibly and do not allow impulsivity to take over. The temptation is always there to let that credit card go another month and just pay the interest. This is the worst thing that you could do and because this starts the digging of the whole which eventually could ruin your credit, hurt your lifestyle and affect your relationships.

Credit cards can be your best friend especially around Christmas, birthdays or holidays or they can be your worst enemies after all is said and done. You have to treat them with care and do not abuse them. Always pay them off each month and enjoy the feeling of borrowing money from others at their expense. If you cant trust yourself then try some of the alternative ways of using credit and reaping the same benefits. You can get a debit card and have the money directly taken out of your bank account. However, sometimes these credit cards do not provide rewards. If you purchase from Amazon.com you could use their credit to earn reward points. In the long run it is up to you on how you conduct your finances. I believe that you would feel better about yourself and other relationships if you stay within your budget and do not spend impulsively. Dont put yourself in the position by living above your means. When people do this, it is a formula for disaster and financial ruin. Lastly, never pay off another credit card with a credit card.

Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds. However, the credit card industry and credit card holders are posed with a big problem called Credit Card Debt. In order to understand what credit card debt actually means, we need to understand the workflow associated with the use of credit cards as such.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you dont incur late fee but just the interest charges on your credit card debt. If you dont pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last months interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you dont still control your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.