Bad publicity is always better press, that is why credit cards often get a bad rap, they can be a wonderful financial tool if used right, and if you eliminate the fear of using them. Of course there are many traps and holes that you can fall into, and if you are having trouble with other things using your credit cards to bridge that gap can and will make things worse in the long run, high interest, huge balances, high monthly minimums are all real legitimate fears. And if you are not careful, you will be in over your head, and your will not feel that your credit cards are helpful at all.
[Read: Get Rid Of Your Credit Cards]
Factors to Consider
- Financial Circles
- Decreasing Credit Scores
- No Discipline
- Lack of Understanding
Fighting off the temptations of the world each and every day, they are hard to do, and when you are in a consumer driven world where in today’s market a purchase is a click away on your smart phone, you have to look to rid yourself of the problems that can be associated with credit cards and the fear of using them, or more appropriately using them wrong. You must avoid the revolving circle of debt, the risk of depreciating credit scores, the lack of discipline and sheer lack of understanding you have about your own financial condition, and how to use your cards properly.
High Interest Rates
One chief fear is high interest rates, and while this fear is not unfounded, it is often grossly over exaggerated. The interest is higher than most other loans, with perhaps the exception of a pay day advance loan, but there are ways to avoid interest all together, or reduce its impact greatly. One way to avoid the interest is to pay off the balances each month, so as to avoid a billing cycle where the interest is calculated on balance, or in many cases a low interest rate is given at the outset and can be maintained if you are never late or behind on payments, thereby triggering the interest rate jump.
Hidden Costs and Fees
This is another big fear, a fear that the card companies are just going to pile up the hidden fees and costs with some slight of hand. This could not be further from the actual truth, the laws require that they disclose each and every fee and cost up front and let you know what they are for and how, if any, to avoid them. Such as the annual fee, which in some cases may be waived if you make a certain minimum monthly purchase amount. So read the fine print, there should be no hidden fees.
Sure credit card fraud is a serious crime and on the upswing. With the proliferation of online and remote purchases, there is an inherent risk that you may be the victim of credit card fraud. But that should not be a fear of using your card, in fact, that should be why you would want to use your card, as opposed to say, your debit card, linked to a bank account. Here is why, a bank account could be drained out quickly before the bank becomes aware and shut it down, whereas a credit card company will analyze the account and if there is any doubt shut the card down quickly if something seems odd. In addition, they will have a better fraud department to help you dispute the fraud, and investigate. If they drain your checking account, you are probably just out of luck.
Fear of Long Term Debt
This is probably the most realistic of all the fears, the fear of oneself. If you are not financially stable, or in a financial rut, overspending on credit cards can be a real problem, you can dig yourself into a hole real quick, and climbing out can be a daunting task. Your first step in overcoming this fear it to get a handle on your financial picture, before you start opening card after card and charging away, once you have the discipline and income, you can use your cards in a sensible way.
There is no real reason to fear your credit cards. The first real thing that you must do is become educated, educated as to the ways to use credit cards and the real ways that they can hurt you, or you can hurt yourself with them. In many ways, the high interest rates, hidden fees and costs and fraud fears are already addressed by the card issuers of the federal laws, when you realize that there are protections inherent in the cards already you will lay down those fears and decide that using your cards is not a bad decision.