It's not hard to spot the commercials and ads online from credit card companies showing all the ways that you can save money by making credit work for you. No matter what site you're browsing, from online toy stores to insurance quotes online, it's difficult to avoid these ads. This is a continuation of a bad idea presented to consumers that you can benefit from putting your costs on credit, which is an ideal that has increased consumer dependency on credit. It’s true that consumers who responsibly apply credit for their purchase can raise their credit scores through timely payments. However, out of control debt and late payments can significantly affect your credit score and future financial decisions. These companies have produced very aggressive and convincing campaigns touting different rewards and benefits of swiping, but it’s ultimately up to the consumer to educate themselves on misinformation presented in some ads.
One of the biggest misconceptions currently around credit cards is that there are amazing advantages of using your credit card to get travel rewards and cash back offers. These cards usually have higher interest rates and the rewards pale in comparison to savings in interest rates alone on another card. Paying money to make money simply doesn’t make sense. Many people want to take advantage of travel miles and rewards, but there is a cost. Placing yourself deeper in debt to receive nominal benefits that accrue at a slow rate may not be worth it in the long run. If you’re one of those few people who can pay off your balance each month, it might be worth it, however, and most consumers tend to pay the minimum amount.
Freedom from cash has an allure to consumer, but it does make it easier getting by. Eventually, the money has to be paid back with interest. If you already have limited finances, you should not place much debt on a credit card. Using a credit card instead of carrying cash can make it harder to track spending and also to notice identity theft on your bill. Use a prepaid debit card. This is a hassle free way of using a card that immediately withdraws the money from an account with no additional charges. It will also keep you from overspending and racking up huge debt balances. Keep better track of your finances and live within your means by using one of these debit cars that many banks now offer as a service.
Using balance transfers with zero APR sounds like a great idea, and many people save money doing this. However, if you can’t pay the debt amount before the zero APR rate expires, you’ll get hit with massive rate hikes that make the whole process pointless. If you’ve transferred your balance to one of these accounts, don’t use your card. Pay off that amount in time before using the card again or it’s going to cost you big time.
Regardless if you’re a college student, a parent, a business owner, or just an every day consumer, doesn’t allow yourself to be used by credit card companies in this way. Of course they’re going to tell you that you should use credit cards. It’s their business to make money off of your debt. That’s not to say that credit cards are evil. They can really help out in certain situations but it’s a bad idea to use them irresponsibly in ways like some of the situations described above. Educate yourself on smart purchasing and don’t buy into these campaigns of misinformation.