Know The Risks Of Credit Card Ownership Before You Go Into Debt

May 22, 2015 Investments No Comments

Owning a credit card is something many teenagers look forward to. There first piece of adult plastic that they can use for all the things they need in life. Not all of them take the time to think about the fact that they will need to take the time to pay that money back.

You Have To Pay That Money Back

The number one most important thing to remember when getting a credit card is that it is not a device for free money. Sure, you have a specific credit limit and you can sue your piece of plastic freely until it hits that limit, but you also have to pay all that money back.

The longer you take to pay it off the more your interest rate will stack up. If you decide not to pay it and just chop up your credit card because of your debt, you’ll just end up with bad credit. That bad credit can make it difficult to get future credit cards or loans.

When You decide To Cancel Your Credit Score Will Go Down

If you let your debt get out of control and cancel your card as a result, it can further affect your bad credit. Having credit available actually works towards raising your card as it calculates what’s available against what you own.

If all you do is owe and don’t have any credit to speak of, then you will have a lowered score. Not only can a bad credit score make it hard to get a loan, it can affect your ability to even rent an apartment!

Be Careful With Your Spending

You want to make sure you protect your credit and your credit cards at all costs. That means checking your accounts often for limits, fees and fraudulent charges. According to VPS, experts in payment solutions, you want to ensure extra protection when you are shopping online or via your smartphone.

That extra protection could also include signing up for work loss protection that helps ensure you don’t fall into debt on money owed to credit cards if you lose your job. Make sure you look at the rules though, because if you are self employed or a contract working you may not be eligible through some card companies.

Credit cards have many great assets. They can work as a great backup in case of an emergency and they are much cheaper than getting a paycheck loan when money just isn’t coming in soon enough for groceries.

However, you must make sure you treat that credit card with respect or you may end up in debt up to your eyeballs. Debt that will hurt your credit rating for as long as it is in existence.