Usually, credit is seen as negative, but most people need to use some credit at certain point -- to buy a house, purchase a vehicle, or finance education. It is important that you use credit (especially credit cards) wisely, in order to avoid getting into bad debt. Credit cards offer high-interest loans to but virtually anything within one's credit limit. The following steps could help you avoid accruing bad debt on your credit cards.
Understand how credit cards really work.
Credit card providers offer people the ability to buy merchandize without paying for them instantly. Surely, credit cards could with to your advantage if you pay off your balance monthly, because you're using the interest-free money of the bank for up to 30 days, depending on the grace period given to you. Also, you get other benefits, which could include reward points, a record of all items you've purchased, the shopping convenience, and consumer protection.
However, when you do not pay your whole balance in a month, the benefits will disappear very quickly. In general, if you carry a credit card balance, the grace period you received will fade away and you will find yourself paying the interest on your purchases beginning on the day you buy them. Credit card interest compounds, so before you know it, the interest you owe is bigger than the principal.
Apply moderation in using your credit cards.
Use your credit cards wisely and purchase only the items which you know you could really afford. There should be enough funds in your bank account to pay off your purchases when your credit card bills become due. Keep in mind that it is very tempting to buy items right now hoping that you will have enough money later on to pay off your purchases. Remember that living on credit is a costly and risky habit to get into. In fact, sometimes you will discover that you have paid more money in interest than what the product you purchased actually cost.
Additionally, to avoid interest fees or late fees, see to it that you pay off your credit card balance before their due dates. Using the online site of your bank will help ensure that your payments are received on time.
If you think you are not able to make repayments on time or cannot stay away from thoughtless, impulsive buying, consider using a debit card instead. By using such card, you will still have your purchases recorded, but you will not pay late fees or interest fees.
To get free legal advice on credit, banking, and finance that can help you manage your finances or help you cope with financial hardship, visit Consumer Credit Legal Service by following these given links.