Credit Card - a boon or a blessing?

In today's hectic life, credit cards and debit cards can be a blessing by always being there. They are easy to carry around with you for emergencies or everyday purchasing and they enable you to buy goods without having to go to the bank to draw out large amounts of cash.

credit cards can be for emergencies only

Just pay by credit card and all your purchases can be paid for once a month when you get your credit card statement. Or pay with a debit card, and the money comes out of your account immediately, but quite often you are charged a fee for using this card. Check your bank statement to see how much you are charged for each transaction - it soon adds up, so monitor your use.

So, with this in mind it is better to use a credit card, provided those bills are paid off in full and on time.

Problems arise when the credit card statement arrives and you do not pay the complete amount by the due date. You are then charged interest from the date of the purchase. These rates vary with some special offers being as low as 1.99% for a few months to a whopping 28% for some department store cards. Make sure you know what rate your card offers BEFORE you buy something, unless you are confident you will be able to pay it all when that statement arrives.

For those of us who carry balances on our credit cards, check the rate you are being charged and see if you can lower it. By calling the credit card company and asking for a card with a lower rate, you may lose air mile points or reward points, but you may end up with a rate at 10% instead of 18%, a significant difference. There may be a small charge for this card, but usually the amount you save on interest payments over the months more than makes up for the annual cost of the card.

Make certain you pay your bills on time. If you cannot pay the whole total off, make sure you pay at least the minimum by the correct time to avoid late fees, and the possibility of losing your low interest rate. Yes, with some credit card companies you will lose the low interest ratew if you are late with a payment. Try to get into the habit of paying your bills as soon as they arrive. This not only keeps the credit card companies happy, but it lowers the amount of interest you have to pay, and pay off as much as you can.

If you do get charged a late fee, you can always call the issuing company to dispute it. If you are a good customer, they may reverse it.

Try not to use you credit cards to obtain cash. You start paying interest on the amount immediately, and the rates for cash are usually higher than for purchases.

Also try not to go over your credit card limit as again you will be penalized for it. Credit card companies use any excuse to higher the interest rate, so make sure you don't give them a reason.

Of course, with all the scams and computer hacking going on these days, you might be wondering how safe it is to have credit card. There is a small amount of risk, but then there is also a risk of getting robbed if you carry cash around with you to pay for all your purchases. Just take some basic precautions and you should be ok.

  • Always make sure your credit card is returned to you after making a purchase. 
     
  • Report a lost or stolen card immediately. 
     
  • Check your statements carefully and report any suspicious charges. 
     
  • Use a credit card with a low credit limit for any internet or over-the-phone purchases - this will reduce the damage that could be done if the information gets into the wrong hands. 
     
  • Only buy from reputable companies over the internet or phone.
  • Shred confidential credit card information if you no longer require it.
  • Store credit card information safely.
  • If you are travelling, make sure your credit card does not have a huge limit, carry a limited number of cards, and make sure those you leave at home are in a very safe place.

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