The nitty gritty about credit cards!
These darn things can be tricky! So lets break it down a bit shall we? Most everyone has at least one credit card. Credit cards come in all types, percentage rates, fees, banks, rewards etc. And you can take charge of this and actually pick the one that works best for you. If you need to purchase in credit might as well get a good kick back out of it right?
Fees! You have to be so careful with credit card fees. Companies will be very quick to add fees on for anything! There are annual fees that you pay to have the card/account. Fees for being late, on top of interest. Also transaction fees, usually on foreign transactions. You could also be charged fees to get cash back. There is a fee to do a balance transfer and sometimes to even make a payment with a real person! (true stuff) Credit cards can be fee ridden so choosing one is so important to read the fine print.
Interest. Um did you know that your interest rate on your card is variable? That means it can go up or down anytime! Crazy right. Usually annually or every six months credit card companies will run your credit to see where your score is currently at and base your rate on that. Another reason to #justgetgoodcredit. In addition they could also raise or lower your credit limit based on your credit score. And of course they want to raise your limit, the more you spend the more money they make off of you in interest. So sneaky!
Debt. Yes people find themselves way over their head often times with credit cards. Its so easy to want stuff and just swipe that card at any time. Saying to yourself, Oh Ill just pay that off later when the bill comes. NO! By the time the bill comes that transaction now has interest piled on top of it! Once a card gets maxed out its really tough to get it paid off. At that point most of your monthly payment is just going to interest. And dont fall into the trap of just getting another one to max out. It can be such a vicious cycle and something to be very conscious of. You have to be credit card educated to make sure you arent getting into debt. No worries, Im here to help!
Credit. Yes! There is some good! Credit cards can give your credit score the boost it needs. You have to be mindful of your purchases and your balance. The sweet spot is to keep your credit card balance under 20% of your credit limit. Then good reportings go to the credit bureaus and you will see your credit score go up. But dont just put one purchase on there and only make the minimum balance due every month. Credit bureaus like to see activity and that you are making good credit choices monthly to raise your credit score.
Consolidation. Sometimes people need a big ol reset and thats ok too! When you pick the right credit card that can happen. You want to pick a card that has the lowest debt transfer rate and no annual fee. Also what you need before you attempt this is a great budget and plan in place. Most credit cards will offer a 0% balance transfer interest rate for 12 or 18 months. So thats your time frame to take advantage of the offer, really buckle down and get it paid off. You dont want to do that too many times or it can effect your credit negatively by applying for new credit. But its a great tool if used properly!
Credit is always tricky and sometimes hard to understand. As always if you need some help with this dont hesitate to reach out and send me a message!