Tag Archives: cards
Introduction to Credit Cards
You probably already know what a credit card is. You see the ads every day – in the television, on the radio, in the newspapers or on billboard advertisements. Your friends, parents and relatives use them all the time. But just to clear up any misinformation, lets look at what credit cards are, why you should have one and what risks are involved with using one.
Simply stated, a credit card is a financial arrangement between you the card holder and a financial institution such as a bank or credit union. The arrangement specifies that you can borrow money from the lender as long as you promise to pay them back in the future. The lender sets the terms for the deal, including how often payments are due, what the minimum payment will be and what interest rates will apply. Your payment will include not just the amount of money you borrowed, but also an additional charge based on that rate of interest.
Credit cards can be used as a tool, offering many benefits for consumers. Some of these benefits include:
Convenience: With a credit card, you can buy anything you want right away, whether or not you have the cash available at the time. If youre purchasing a big ticket item like a computer or a washing machine, you dont have to wait for months until you save up the money.
Emergency Protection: If youre ever in an emergency, youll see how helpful a credit card can be. Whether youre stuck with medical bills or auto repair fees, using a credit card can help you get back on your feet again.
Security: Large amounts of cash can be lost or stolen. But if your credit card goes missing, you can have the account cancelled and a new card issued without losing any of your money.
Building Your Credit: If you dream of buying a house or really nice car, you need to have a credit history that demonstrates you can take on debt and pay it back on schedule. You can use a credit card to make small purchases and build up your credit score by paying your statement on time.
When used responsibly, credit cards can help improve our daily lives. But the temptation to live beyond your means and max out your credit limit can be a problem. Thats why its important to think of your credit cards as tools that you can use, not free tickets for anything you want. Here are some simple tips to help you cope with your credit card debt:
Make a Budget: One of the first steps to financial freedom is a realistic budget. If you dont already have one, check out the article Creating a Budget on Smart Young Money and set one up for yourself. Sticking to a budget will help keep you from splurging with your credit card.
Set a Limit: Many analysts recommend keeping your credit card balance around 30% of your credit limit for maximum benefit in the formula used to calculate your credit score. Promise yourself not to exceed that limit and you wont have with out-of-control credit card debt.
Go Back to Cash: If youre having trouble keeping your credit card in your pocket, switch back to cash for awhile. When you use a credit card, you dont get the same feeling of having forked over your hard-earned cash, so youre prone to spending more. Using cash for a bit will help you remember that little purchases add up.
Get Credit Counseling: If your debt gets out of control, talk to someone! Ignoring your credit problems wont make them go away it will only make them worse. Talk to your parents or a trusted friend who may be able to help, or consider getting help from a group or institutions that can help you with your problems.
Credit cards can be helpful tools, but the potential for abuse always exists. Taking the time to learn how to use credit cards properly can help you prepare for a bright financial future.
Debt Can Have an Impact on Your Health
No one thinks debt is fun or enjoyable, but did you know it can also be detrimental to your health? The stress and tension bills can create causes more than just mental discomfort: it can become a serious hazard to your health. It is more important than ever that you get out of debt and save money. There is a lot more at stake than just your credit score.
Anyone who has had to deal with debts from credit cards, medical bills, and loans knows that it can contribute to irritation, frustration, anger, stress, anxiety, and more than a few sleepless nights. Some people, however, experience physical side effects as well, including headaches or migraines, stomach aches, back and/or neck pain, digestive tract problems, serious anxiety and/or depression, increased risk of heart attack and ulcers.
These are all effects of chronic stress, when our bodies are constantly on high alert. Our bodies dont know the difference between a lion chasing us or the fear of not making the mortgage. We react similarly, flooding our system with adrenaline. When our body is under unrelenting stress for long periods of time, it affects the ability of the body and mind to function optimally. What all this means is that overwhelming bills can cause enough stress that our body considers it a serious emergency.
When you pay off credit cards, loans, and other burdensome bills, you begin to feel better. It is not just psychological, though that is important. Your body actually feels better.
If you are trying to cope with huge debts and it is taking its toll on your health, there are several things you can do to feel better. The first is to take action. Often, when we do not have a plan or feel like there is nothing we can do, stress is much worse. What can you do about your debt? Can you speak with your creditors? Can you develop a tighter budget? Do you need counseling from a dependable debt management expert? Is debt reduction a good option for you? There are things you can do to improve your financial situation.
As you are working to improve your personal finances, you can also take steps to reduce stress. Take walks, do yoga, exercise, knit, draw, read, have a movie or card night with friends, talk to someone about your situation and your fears. There are infinite ways to reduce stress, so find what works for you and make a commitment to include it into your day. Stress specifically related to finances can be reduced by not adding to your current balances, saving money, and seeing your credit card balance creep down each month. In this case, positive action is the best stress buster.
One of the most stressful parts of having debts is the feeling of helplessness and isolation. If you feel like you cant do it by yourself, dont worry. You dont have to. Impact Debt Settlement is ready to work with you to achieve not only a better financial future for you and your family, but also better health so you can enjoy that debt free life. Credit repair is possible, and we can help.