Do You Really Need a Credit Card?
Many people consider it a necessity to apply for credit cards but in reality, these cards can end up costing you a great deal in transaction costs, annual fees and interest charges. However, there are many cases where a credit card comes in handy. When you are looking for the right card, it would be wise to compare credit cards.
Useful Credit Cards
Despite high interest charges for revolving balances, a credit card can be a very useful item to have, provided it is used correctly. These cards are particularly helpful in the case of an emergency purchase, or if you are faced with an unforeseen high account. The best way to use a credit card, is to pay the balance off in full each month. Only charge what you can afford to pay off each month.
Credit cards are also really valuable should your vehicle suddenly break down. Having a credit card can be most useful in an emergency situation when dining out, particularly with friends, when you have budgeted for less than the final amount on the bill.
Credit cards can also be used for over the phone or online purchases and it is for these reasons that many people apply for credit cards. The ability to purchase an item via an internet auction, or from an online store that is offering sizable discounts, is very appealing to many consumers.
You can purchase an item from out of state and have it delivered to your doorstep with a credit card and a person is able to make internet and phone bill payments by using a card. This is a very convenient approach to paying your accounts and negates the need to wait in line.
Credit card issuers typically offer purchase insurance or even an extended warranty when a person uses their credit card to make a purchase. Both are very valuable, as they offer the opportunity to recoup the purchase price of an item if it is damaged, lost or stolen. These offers also allow you to benefit from purchase insurance when buying online or from a remote destination.
Pay Attention to Your Credit Card Usage
Although there are many positive reasons to apply for a credit card, having this option requires you to be constantly vigilant to make sure you remain debt free.
You can pay an annual fee of anywhere from $50 to $400 on your card and this amount does not include usage fees. Once a person becomes an exception to the credit card rules, by exceeding their card limit or by not paying their monthly bills when they are due, an exception fee will have to be paid.
Credit cards may offer low interest introductory periods from time to time, but if the balance owing is not paid back to zero by the end of the promotional period, the low interest is forfeited. In these circumstances, the cardholder will be paying interest charges that can be as high as 20 percent.
Possible Credit Card Alternatives
It makes good financial sense to open an online savings account, which can serve as an emergency fund. By making an automatic payment from your salary each week, this payment will quickly add up and can be used for the emergencies that people use a credit card for.
Obtain a debit card, which will also allow you to make purchases via your phone or online. The important difference is that this type of card accesses your own funds and you don’t accrue a balance on which you need to pay interest. A debit card issued by either MasterCard or Visa will also offer purchase interest and secure purchases.
Do you think you can make it without a credit card?
Are you ready to build credit wisely? Click here to see the card I recommend as the best credit card for young adults. The card allows you to get your credit score free each month.