Credit Cards

Credit cards tend to get a bad wrap. And honestly, it’s just from people being uneducated about the proper way to use them. The temptation to have and own a credit card starts a very young age for many of us.

We grow up seeing our parents, and possibly even our siblings and friends having access to this piece of plastic that just has to be swiped to walk out of the store with some really cool items. In your eyes, it’s the perfect way to get what you want, right? But then, reality hits. Credit cards can be a really great way to get some great items, but you still have to pay for them.

As soon as you use that credit card to make that purchase, the clock starts ticking. Before long, you’ll get a bill in the mail showing you the exact amount that you owe for the item that you purchased. Simple, right? Almost a little too simple for some, it seems. Along with the amount shown, the credit card decides to be friendly and give you a few other options for paying back that loan amount for the item that you just purchased.

Don’t have the money to pay for it right now? NO PROBLEM. The credit card company is prepared to extend that loan, with just a little bit of interest added on top. The interest amount will vary depending on what your credit score is. You can read more about that here: If you have a high credit score, your interest rate will be lower because the credit card company wants to “reward” you for your hard work in making your payments on time. If your credit score is low, your APR will be through the roof.

cibil scoreThat sudden purchase that you made earlier with your credit card takes on a whole new life when it comes to trying to figure out how to pay it back. If you pay it in full the moment you get your bill, you pay nothing extra and it’s over and done, 100% paid for. If you decide to pay the minimum balance due and wait 30 days to pay anything else, you’ve done the bare minimum to keep your credit score in good standing, BUT you’re now accruing interest for your purchase. That item that you just “had to have” or got a good deal on because it was on sale is now costing you extra money that you didn’t anticipate.

long term goalsWhen it comes to using your credit card, educate yourself. Know what your credit score is so you can also know how much interest you’ll be paying each and every month for your purchases. If you find that you are only going to use your credit card for emergencies due to the high APR, then stick to that thought process no matter how tempted you may be to use it.

Remember, a purchase is only a deal if you save money! The moment that you start accruing interest on your credit card, it’s no longer a deal and it turns into more of a financial burden.