It’s hard to imagine in today’s credit-conscious society that there is anything bad about having a credit card. Of course, if you live in the other camp, it’s hard to imagine there is anything good about them.
The fact is, that with credit cards like anything else in the world, there are good and bad aspects.
As a consumer who has experienced the good, the bad, and the ugly when it comes to those little pieces of magic plastic, I’ve created a short list of pros and cons.
If you ever want to buy a home, having a credit rating is important. Having a great credit rating is even better.
By obtaining a credit card or two early on, you can begin to establish a track record. Be careful! Use credit cards with care and thought, buying only what you can afford.
A few missteps in the payment department and this practice can turn quickly to the ugly column.
Interest is the cost consumers pay to the credit companies for the luxury of spending their money. Shop around to find the best interest rate you can get, and then be sure to pay more than the minimum amount due each month.
By paying more, you pay less in the end. Less interest, that is.
After my divorce, my budget took an unexpected nosedive (not uncommon for anyone in today’s age of unemployment).
When I couldn’t pay my credit card debts, I found the companies sold my debt to far more aggressive collection attorneys whose practices for collection can rival gangsters in old Cagney movies.
The best way to avoid harassing phone calls and maintain your sanity is to not apply for credit cards in the first place.
Are credit cards always a bad idea? I don’t believe so.
I know of a young man who used a credit card which offered points toward a new car from a large manufacturer all through college.
He only charged items he would have paid cash for and paid off the balance every month.
When he graduated, he paid thousands less for his first new car than he would have otherwise.
This practice takes immense discipline and planning. Ask yourself if you have what it takes to use a card in this manner, and you can add it to the “good” column.
If you can’t? Be sure you don’t end up feeling ugly.