When getting credit card offers, many people do not stop to read the fine print at the bottom. Not reading it can be a mistake because that is where the card’s terms and conditions are.
Interest-Free Purchases
Often when you walk into a store looking to make a purchase, at the checkout, they tell you about how you can apply for their store credit card and have zero interest for a specific length of time. In most cases, you already have the cash on hand or another credit card you intend to pay with but decide to take their offer.
Before saying yes, there are things you need to ask. The first one you need to know is how long the interest-free period is. Are all purchases included or do only your current purchases qualify? You also need to know what the interest rate will be once the interest free period is up if you have not paid off the card.
Failure to Pay the Minimum Balance Is Considered a Missed Payment
Some people believe that any payment on their credit card is considered a payment, this is not the case. When you do not make the minimum payment, you are charged a late fee, and your account is considered past due, and it will reflect on your credit report.
If you do not have the money to make the minimum payment, the best thing you can do is call the credit card company directly. Most of the time, the credit card company will work with you to make a payment you can afford and keep your account in good standing.
Check for Hidden Fees
Credit cards can often have hidden fees that you are unaware of unless you read the agreement thoroughly. One of the fees you may encounter is a yearly fee for having a credit card. There are various reasons cards may charge an annual fee. For example, the card may offer benefits that make the cost worth it, or you could have poor credit, so you are simply paying for the privilege of having a credit card.
Losing your credit card may cause you an extra fee; typically, most credit card companies will allow you one free credit card replacement. Any replacement cards after that will incur a replacement fee.
Be Leary of Credit Card Offers through the Mail
When you receive credit card offers through mail advertising that guarantee approval with zero interest on balance transfers, do your research. These cards may be a good deal, but more often than not, they can be misleading. The guaranteed approval is contingent on your income and debts. The APR can change depending on your credit rating. The $10,000 limit typically lowers once you apply.
The Impact Credit Cards Have on Your Credit Score
Depending on how you use your card, it can either impact your credit positively or negatively. Ideally, you want to raise your credit score and use your card responsibly, but this does not always happen.
In recent years credit card debt has risen dramatically for Americans. Most individuals have over $5,000 of credit card debt, and over the last year, it has increased to almost $6,000. Your credit score is based on how much of your credit you have used. If you surpass the suggested limit, it lowers your score. This is why it is essential to pay off credit card debt quickly.
The Difference Between a Secured and Unsecured Credit Card
A secured credit card is one where you make deposits to the credit card and use what is available, while an unsecured credit card has a spending limit that the credit card company places on it.
If you have bad or no credit, a secured card can help you build credit and improve your credit rating. If you have bad credit or no credit, an unsecured card will have high fees and interest rates. Knowing that, secured credit cards are an excellent way for individuals to learn how to use credit cards responsibly and stay within a budget.
Conclusion
In 2021, many small businesses closed and people lost their jobs. With the rising cost of living, many people have started using their credit cards to keep their bills paid. Misuse of credit cards only causes more financial difficulty, and if it is not taken care of quickly, you may have to file for bankruptcy. To get the best financial advice, reach out sooner rather than later.
Remember, debt is something many people experience and will continue to experience. Speaking with a bankruptcy lawyer will help you in determining which options are best for your financial situation.
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