Your Credit Score , What It Can Do To You
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Your Credit Score , What It Can Do To You

A good way to think about a credit card purchase is to double the initial price of the item, if you are willing to pay $200.00 for an item that is priced at $100.00 then a credit card purchase may be reasonable.

When teens are entering into the adult world they are often bombarded with credit card applications and credit opportunities.  The problem is that many times these teens and young adults are not properly educated about handling credit cards, this type of financing and how to manage this effectively.  This often leads to enormous debt for items that where merely an entertaining purchase rather than an item of need that has been thought out.

One of the main problems is when a purchase is made on a credit card there is a minimal amount due. Often times only the minimum payment is made on the credit card bill which barely pays the interest rate on the purchase.  More purchases are then made because people will think they can have all this great stuff for a few bucks a month, not realizing the actual amount charged is barely being reduced.

A good way to think about a credit card purchase is to double the initial price of the item, if you are willing to pay $200.00 for an item that is priced at $100.00 then a credit card purchase may be reasonable.  People that are just building their credit will pay a higher interest rate until their credit reliability is established and at that point you can talk to the company about reducing your interest rate.  When your credit card debt gets out of control and you default on a payment your interest rates will sky rocket with out warning! 

A good way to establish your credit with out getting into trouble is to make your purchase and pay the bill in full each month.  This will establish an appearance of not wanting to be in debt with the credit card company and they begin reducing interest rates and increasing you credit limit.  You should then keep the credit cards for emergencies.  By emergencies I mean car problems or an urgent repair in the home, these situations can be costly and you may not have access to the amount of cash needed immediately. 

It is also important that you be choosy about the type of credit card you get.  A store credit card may be great fun and helpful but it will not help you pay house hold or auto repairs.  Stick to major credit cards that can be used anywhere, that includes a variety of purchases and possibly for travel.

Never share your credit information with friends or family and never ever loan out your card.  As much as you trust any person there are times when their judgment will be questionable.  Something to think about as well is that if they need to borrow your credit card they have probably trashed their own credit.

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Comments (1)

Excellent and useful topic.thanks for sharing

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