Credit cards can lead people into debt. They can take a long time to pay back and they can lead to a spiral of debt. However, there are advantages of having credit cards and ways to use them so that you can benefit from them. It is worth learning more about them and thinking about whether you can change the way that you use them to your benefit.
When you pay for things using a credit card the money does not have to be paid back immediately. You can wait until your bill comes in before you have to pay anything back. This can take up to six weeks and you will be expected to make a payment each month. The bill will show you what you have to pay and how much interest you will be charged if you do not pay back the full amount. If you pay back everything there will be no interest charge for that billing period but if you pay back less, then you will pay interest. The bill will have a minimum repayment amount which they will insist that you pay and you can choose to pay that amount or more.
If you do not repay the bill in full each month, then you will be charged interest. Interest on credit cards is quite high and it is best to avoid it if you can. Many people set up a direct debit so that their credit card is paid off in full each month. This is a great idea because it means that you should never be charged any interest for using it.
You may wonder what the point is of having a credit card if you are going to pay it off each month in full, but there are actually many advantages. Firstly, as explained above you will not have to pay for things immediately, but you can wait until the bill comes in. This means that you effectively get weeks of interest free credit on items that you buy with it and you may even be able to get interest on the money that you would otherwise have spent. It can help with budgeting if you pay the card off when you get paid, you will know what money you have left to spend for the rest of the month.
When you are buying things online you will need some sort of card to pay. A credit card is more secure than a debit card in some ways. Firstly there is an insurance aspect so if you buy things which are not good and cannot get a refund, you may be able to get a refund through the card. A credit card also offers more security than a debit card. This is because if the card is stolen or the number is taken and it is used by someone else, the money does not immediately come out of your bank account, like it would if they were doing it with a credit card. If you keep a check on the transactions and see things going through, ten you will be able to make sure that they were all purchases that you made.
However, there are some people that can easily get into trouble with a credit card. They may have a tendency to spend on it because the credit is available to them. This is not the case for everyone, but some people do find it difficult to control their spending and so if you think that this will be the case for you, then it is best not to get a credit card at all. If you start spending more than you can afford to pay back, then you could end up with debts piling up and this is not a good situation to be in.
So, although there are great advantages to having a credit card and ways to use it to make sure that you benefit financially, you need to be careful. If you think that there is a risk that you will get into trouble by spending more than you can afford to repay or that it could lead to you getting into debt problems then it is probably best to avoid them in the first place.
