A credit card, also called a charge card, is a credit-card product issued to consumers to allow the cardholder to purchase items and services using the credit card as an alternative to cash or check payments. It is often paired with a debit card which works like an ATM card. Most credit cards are not a bad idea if used properly. They can, however, cause problems if you do not know the proper etiquette with your credit cards.
If you have had problems with your credit cards in the past, you may be concerned that your credit report will have a black mark or number on it. This is because, in some cases, your credit report will be tampered with by unscrupulous people. For this reason, it is suggested that you review your credit report once a year to make sure it is accurate and that there have been no mistakes made.
The first thing to do is go over your credit report to find any errors. You can get a copy of your credit report at once from the company who provides the cards. Make sure you note any account that has a wrong due date, an incorrect balance due, an account that does not belong to you, etc. If you find any errors in your report, contact the company immediately so the error can be corrected.
If you have many credit cards and use them irresponsibly, one or more of them might be charging you high interest rates. Many credit cards offer cash advances as a way to pay off balances quickly. The downside to cash advances is that they are very expensive compared to other debt relief options.
Another option to help you reduce credit card debt is to stop paying your balance in full. Paying your balance in full will lower your interest rate and extend the length of time you have to pay off the debt. Start by paying just the minimum on all cards. After you save enough money, you can start paying extra just on the cards that are currently being paid off.
Many credit card issuers now charge late fees for any amount of time that you fail to make a monthly payment. This is where a combination of every time you miss a payment along with the minimum payments will put you in a financial bind. Every time you fail to make a payment, this late fee will continue to be charged until the entire balance of the debt is repaid. If you want to avoid these fees, be sure to keep track of your minimum payments and regularly make them.
One more option that credit card issuers now allow you to do to reduce your debt is to combine all of your credit cards into one easy to manage monthly payment. Most of the issuers now will let you set up a monthly payment using either your debit cards, a loan, or your credit cards themselves. In most cases you can choose the payment schedule to best meet your financial needs. This makes it far easier for you to make the monthly payment and gives your credit score a boost. When you get into a financial bind and need to make a large purchase such as a car or house it often benefits from using one of the many debit cards to hold the money. The money is usually available within minutes and will not leave your checking account until the exact amount has been deposited.
These options show how the credit card issuers make money off of people who do not pay their bills on time. The best way to prevent being overcharged is to monitor your spending so you know exactly what you are paying for each month. If you are not able to do this it is far better to pay your bills in full each month than to allow these charges to accumulate. Credit cards are great tools to use for accountability but they must be used responsibly.