Are credit cards an expensive type of credit?
They can be but they do not have to be. It all depends on what credit card you got and how you use it. If you chose the right credit card and use it the right way than it can be one of they cheapest types of credit available.
There are plenty of credit cards on the market that offer 60 days interest and fee free. This means that you can borrow money for free if you pay it back within 60 days. This is a lot better option than pay day loans and other short loans that you might have to take if you run out of money. A good credit card can completely replaced these types of loans and save you a lot of money.
Make sure that you always use your credit card responsible.
What to think about when choosing a credit card?
There are two main things you should think about when you are choosing a credit card. These two things are:
- If the card offer a interest free period
- The APR on debt that is not paid within the interest fee period.
The interest free period is the most important factor if you think you are going to be able to pay of most of your purchases quickly. The APR is more important if you think you might accumulate debt that will take you a little longer to pay down. The ideal credit card should have 60 or 90 interest free days and a low APR.
Another thing to consider is the yearly fee that you have to pay for the card. This is usually not as important as the two things I mentioned above but is worth checking since some cards have high fees that might make them less suitable options.
Many cards offer a number of other perks such as airline miles and other bonuses. These things can help you choose between two otherwise equal cards but the perks are very seldom good enough to make it worth choosing an otherwise inferior card to get them
What to do if you have high credit cards debt
High credit cards debt can be a great burden that it is hard to get rid of. The interest payments are so high that you barely pay down the principle if you only pay the minimum amount every month. If you have this type of debt then you should try to pay it of as quick as possible even if it means making sacrifices you don’t really want to do. Try to always pay more than the minimum amount each month.
If the APR on your credit card debt is high then it can be a good idea to refinance the credit by taking a small personal loan large enough to pay of the debt. This way you can reduce the APR you pay on the loan. The result of this is that less of each payment will go towards paying interest and more will go to paying down the debt itself. By refinancing your debt through a personal loan you can also extend the payment plan to make it easier to afford to pay the monthly payments.
Try to pay as much as possible each month to get rid of the debt as soon as possible.
Should credit cards be avoided?
No. Credit cards can be a great tool to have and can help you to balance your household budget provided you use them responsible. Large credit card debt on the other hand (all debt really) should be avoided as much as possible. Credit cards should never be used to buy things you do not need and that you can not afford without using the credit on the card.
It is how you choose to use your credit card that will decide if it is a great tool that makes your life easier or if it turn into a financial burden that it is hard to get out from in under.
Should I get a credit card?
Only you can answer this question. A credit card can be a great tool and it can save you a lot of money if you ever need a quick loan as it helps you avoid pay day loans. Every one who can use their credit card responsible should get one so that they have pre-approved free credit if they need it.
If you know that you are bad with money and that you make spontaneous purchase that you cant really afford then a credit card is a really bad idea as it makes it easier to buy things you can not afford. In this case it is better to not get one.