We hear it all the time – debt is bad, avoid debt at all costs. Often, people are terrified to even take out a credit card, fearing that it will start them on a slippery slope to financial ruin.
I have had credit cards since I was 18 and I must confess, in my younger years I was irresponsible with them, barely managing to make the minimum payment each month whilst my balance grew higher and higher. Even though I had only accrued less than £1,000 of debt, my credit card bill felt like a chain around my neck. I educated myself and realised that I needed to clear my debt as soon as possible so I lived frugally until the balance was cleared. Since then, I have been a lot more careful and have learned that used responsibly, credit cards can be a good thing and I’d go as far as to say that everyone should have a credit card.
If your credit card debt becomes overwhelming, consider a loan such as those offered by Carina Advisors
If you have made found yourself falling into credit card debt that is spiraling out of control, I would recommend a low-interest loan, where you just make a single monthly payment, such as those offered by Carina Advisors.
Why having a credit card can be a good thing
The reason why I say this is three-fold: first off, having a credit card and making (at least) the minimum payment each and every month will really boost your credit score. So when it comes time to apply for finance for a large purchase such as a home or a car, lenders will see you as financially responsible.
Secondly, making large purchases on a credit card offers a lot more protection than when you pay in cash or with a debit card. For example, a couple of years ago made an online purchase of some Christmas presents from a retailer that went bust a few days later. The goods never made it to me. Because I had paid by credit card, I was able to contact my credit card company who were able to refund the money to me within a couple of weeks of me filling out a form.
Finally, you never know when you will need to make a large unexpected payment and whilst it would be nice to have the cash reserves to cover these, let’s face it, not many of us do. A credit card can be a lifeline in times of need.
However, I do have a few tips when it comes to making credit cards work for you.
Top tips for responsible credit card ownership
Choose a card with low interest
Pay it off every month if possible or at least, never miss your monthly minimum payment (set up automated payments)
Save enough of your available credit for any unexpected large expenses
Review your statements regularly for suspicious transactions
Make regular transactions to boost your credit score (don’t let the card lie unused)