Benefits Of Responsible Behavior In Credit Card Usage
Credit cards are single handedly responsible for putting a massive amount of consumers into debt each year. This is mostly because consumers aren't educated on the proper usage of credit cards, but also because borrowers may get themselves into more than they can handle. If that's the case, there are several guidelines to follow to prevent such catastrophe.
Anyone with little to no experience with credit might get over excited and get carefree with spending "free money." It's always fun to spend someone else's money, but it should be made apparent that the purchases will catch up to the buyer in the long run, and with interest rates if they aren't careful. In this situation it is best to educated newcomers to credit on how credit cards are best used for emergency situations, and not for everyday purchases.
Another important lesson in credit cards is that they can be used without repercussion, so long as the debts are paid off in a correct manner. Debts can usually be paid off within a month and no interest will be put onto the consumer. But should any items not paid for still be on the credit card after a month, interest rates will start to pile up faster than consumers will like. As long as a consumer knows they can pay off the debt within a month, credit card usage is usually regarded as safe.
To better reel in new customers and profits, credit card companies like to offer incentives for using the credit cards they offer. Incentives usually aren't very large- with some credit companies offering cash back bonuses or grand prizes for select users. In offering incentives, credit companies hope consumers get purchase happy and buy more than they can pay for, whereas credit companies would benefit from new interest rates to be paid.
Another more modern scheme among credit companies is to offer low interest rates for a certain period of time, and then increase them to unfair levels after a certain amount of time. Credit companies hope in this case that consumers forget they have to pay interest after a certain amount of time, or that they have bought a very expensive item during the no interest phase that carries over to the date where they need to start paying higher interest rates.
There is much to lose by using a credit card, but as long as a borrower can be responsible about the situation there is less of a chance debt will be obtained. In some cases credit companies will work with customers to adjust interest rates, plan payments, and even consolidate debts should they indeed be in over their head. In this case, credit companies can be just as helpful as they are greedy for money.
Final Thoughts
Creditors know how to pull the right strings with borrowers, as has been made apparent with their many marketing ploys. But to stay out of debt and free of any troubles, it is recommended that consumers pay with cash or check where possible. As previously stated, credit cards are best used for emergency situations only. Using them for much else may put borrowers into a debt that they can hardly climb out of- and where consumers can avoid debt, they should do so at all costs.