Thanks for your question.
Since we're talking about credit cards I would like to point out a few useful facts and tips about them for everybody in the community to be sure what we're talking about.
Having the ability to borrow money when you need it gives you flexibility. But borrowing too much money and being unable to pay it back is a serious problem. In fact, the fastest growing group declaring bankruptcy is age twenty to twenty-four. It’s important to use credit responsibly and avoid having too much debt. If you understand how credit works and use it wisely, it can help you to reach your goals.
The benefits of having credit are:
- The option of buying something today and paying the money back over time, rather than having to wait
- The flexibility to act on major purchases and life opportunities that may require more money than you have on hand right now, like buying a computer, or borrowing for college
- Easier to rent an apartment and to get service from local utility companies
- Easier to buy what you want, when you want it
The risks of having credit are:
- Overdoing it; borrowing more than you can afford to repay
- If you don’t make your payments on time, you’ll damage your credit record
- Losing money on late fees
- Having to pay additional interest
- Difficulty getting loans or credit in the future
How much debt can you repay?General guideline #1:
Never borrow more than 20% of your yearly net income.
General guideline #2:
Keep your credit card debt low enough so that your required payments are no more than 10% of your monthly income.
Perhaps people might be interested in having a debit card instead: Whilst Credit cards run up an amount of money that you will owe in the future, a balance that you will be required to pay back at a later date. A debit card purchases deduct money from your current account - from funds that you already have available. So you're only spending the money that you already have earned instead of borrowing it from the bank.
In order to exploit these tools properly remember to always keep an eye on your accounts. I hope this infomation is going to end up being useful.