Discipline and debt for beginners

That first credit card is either a blessing or the beginning of the end and it is up to each person to decide which. It seems so great at first; you just flash your card and go home with a carload of the things you haven’t been able to afford until now. But when your statement comes and you realize that you can’t pay off the principle and you’re going to start accruing interest, you start to realize that all that fun stuff is costing you far more than you were willing to pay. Even worse, you can be wrecking your credit score, which can affect you for years to come. The main rule to keep in mind when you get your first credit card is both the simplest and the most important. Don’t carry a balance. Just don’t do it if you can help it. If you avoid carrying a balance you build a stable credit rating for yourself and get yourself on the right track. The next best step is to maintain a small and manageable balance. Decide in advance that you will never have a balance at the end of the month greater than $250.00. That’s $250.00 of purchased goods or services that you would not have been able to afford prior to the acquiring the credit card. You just need to not spend any more money on the credit card than you would in cash on a regular month, and then instead of spending that cash, apply it towards the cards balance. This might seem strange, it might make you wonder what the point is of having a card, but it will build credit and keep you out of trouble. You always have that credit there for extremely unexpecte4d situations, but just don’t abuse it and pay that balance every month. If you don’t you’ll be paying far more for what you bought than it is really worth. The spiral you can slip down with your first card if you start carrying a balance is a very dangerous one. Since you don’t have any established credit you will probably have a higher interest rate than many people with similar cards. So first you have to deal with that on your balance. To make matters worse, if you really overextend yourself and can’t meet your required minimum you will get an extra fee. That extra fee might be enough to tip you over your limit which will earn you, you guessed it, another fee. You can actually wind up watching the balance on your card go up from month to month, all the while watching your credit score go down and down. A low credit score can have a very serious effect on your future if you ever want to get a car loan or a mortgage, so avoid all the troubles and use your credit card responsibly. It probably sounds like it can’t happen to you but it does happen to more and more Americans each year. Don’t give the credit card companies all your hard earned money in fees and interest. Just make your payments on time, and always pay as much as you possibly can off of the balance. Over limit fees and late payment fees are significant charges that only compound ones financial problems. Following those simple rules should keep you out of trouble. This might sound like more trouble than it’s worth, but if you use your card and stick to the guidelines above; you’re building credit. That will help you immeasurably in the future. It never hurts to develop your money management skills, and a first credit card is often a test of how wise we can be with handling our money. Credit card use often drives consumers into financial duress, but this doesn’t hve to be the case. Prudent use not only enhances a consumer’s prospect for better financial opportunities in the future but also allows someone to use the credit card, as valuable resource to improve their life not hinder it. So pass the test and secure a good credit rating for the future.