Wednesday, February 22, 2017

My Top Five Don'ts With a Credit Card

     So, we are going to talk about the dreaded topic of credit cards. For some people this is a scary subject, but it really doesn't have to be. For me, I was terrified to get a credit card. First off, I was horrible with money growing up and well into being a young adult, so I just avoided the subject of credit cards in all of its entirety. But when the time came for me to get a credit card I just jumped right in without doing any research… at all. NEVER do this! Not that it has hurt me in the long run but I could have at least avoided a few mistakes along the way. Here are a few “don'ts” you might want to look at before you apply for that card.

  1. Don’t get a store credit card just for the discount you get the day you sign up!
          Once upon a time, my husband and I were shopping at Kohls. I saw that we could get 30% off our purchase if we applied for a credit card and then I could just cancel it if we don’t use it… so we got the card. We got approved and saved about $90 off our purchase. Hurray! Who doesn’t like saving that kind of money? Well, a few weeks later I do some research and find out that if you cancel a credit card it puts a pretty big ding in your credit score. My husband and I have been trying to build our credit score so we can buy a house so we can’t afford to put a ding in our credit scores. Well, I guess I’ll just buy from Kohls every now and then. Wrong again. I don’t know about you all but Kohls can be tricky when it comes to ordering online. I get the amount I need to avoid shipping fees, add a promo code, and bam! The shipping fees are back. $9 to ship something is a bit pricy for me. So now I am stuck with a card that I don’t really like, but have to keep using every now and then so it doesn’t get cancelled. See where I’m going with this? Do your research!

2. Don’t charge more than what you have in your bank account!
    Credit cards are tempting in the sense that you can charge as much as your limit allows you and then pay it off over time. Please don’t do this unless it is your last resort in an emergency. Not only will this drastically lower your credit score but it is immediate debt that will take a long time to get out of. My husband and I had a time where we were living off our credit card because our options were limited at the time. Thankfully we were able to pay it completely off the next month. We had zero interest on it, but it was still stressful having so much on our card. Now we are able to just use it for groceries and gas and pay it off each month. That is the way to go! It will build your credit score and teach you how to properly use a credit card.

3. Don’t apply for multiple credit cards around the same time!
   When you apply for a credit card you get what is called a hard inquiry on your credit score. Getting a hard inquiry will lower your credit score by a few points. A few points isn't too big of a deal, but if you apply for several credit cards all at once those few points will add up putting a major dent in your credit score. Fortunately I did know this when I applied for my first card. I waited a few months before getting another. So be mindful of this when you are wanting a card. Do your research and apply for the one you want, wait and then if you want/need to, apply for another.

4. Don’t get a credit card if you are bad at managing money!
   I’m hoping this is a no brainer for most of you, but sometimes you just don’t think about the consequences of mismanaging money when you get your first credit card. Credit cards are a very easy way to fall into debt. If you are already in some serious debt or are just not very good at setting a budget and managing your money then I would steer clear of a credit card until you feel you are responsible enough to manage it. This is the reason I never got a credit card when I was younger because I was horrible with money. If I had money I felt the need to spend it all immediately.

5. Don’t be afraid of your credit card!
   I know all of these things I’ve touched on make credit cards seem like they are a scary thing but they really aren't. It take a responsible individual to use a credit card properly. If you treat it like a scary thing you will probably never use it. Neglecting to use your card may lead it to be closed. Having a closed account on your credit score is never a good thing. But neither is spending too much money on your credit card. There is a balance that must be learned when using your card. Use it, pay it off ASAP, repeat.

Questions for YOU!
Where you ever a bit nervous about having a credit card? Did you feel you could handle the temptation of having a large credit line?

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1 comment:

  1. Credit cards are not really scary if used responsibly. It is recommended to start with a secured credit card, especially if you have no prior credit history or your credit score is bad. Here are some nice example with low APR and low annual fees: