Credit and Credit Cards

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If you are not working right not due to COVID-19, money is probably tight. You may also be totally bored and looking to do some retail therapy. But you should resist the urge to put unnecessary purchases on your credit cards, especially if you can’t afford to pay it off every month.

Did you know that a 2016 study found out that more students drop out of college due to credit card debt than due to academic failure? You probably know the story – as a young adult you are offered a credit card with a low limit, and when you reach that limit they up it, and then they up it again. Before you know it, you’ve suddenly you have bought $2,000 worth of clothes and restaurant meals and you have no idea how it happened. Suddenly your monthly payment is $85 and interest keeps tacking on. Bet it happened to someone you know.

So, should you use a credit card? Maybe. Having a credit card can help establish a credit history or give you security in an emergency. The dark side? A credit card is a quick way to create long-lasting debt.

Here are some points to consider in using credit cards wisely:

  • A credit card isn’t free money. Do your homework when choosing a card. Select the company that offers the lowest fees and interest rates.
  • When you use a credit card, you are borrowing money from the credit card company to make a purchase.
  • You should only charge what you can afford to pay back. Use your budget to figure out how much you can afford every month and keep track of what you spend so that you don’t go over-budget.
  • Credit cards shouldn’t be a money substitute for items you can’t afford. The only reason to go beyond your monthly limit would be an emergency – such as a new transmission for your car or a doctor’s bill.
  • Pay your bills on time. When you don’t pay in full, the outstanding balance collects interest.
  • If you can’t pay the whole bill, try and pay more than the minimum payment. If you pay just the minimum due you are not reducing the amount owed, since interest charges are accruing.

Here are five signs that you might be overspending on your credit card:

  1. You always pay your bills late.
  2. You only make the minimum payment on a credit card.
  3. You exceed your credit limit.
  4. You work overtime to keep up with credit card bills.
  5. You use one credit card to pay off another.

If you use your credit card wisely, it can build your credit rating, offer you security in case of an emergency, and perhaps even allow you an occasional splurge. If you don’t get carried away, a credit card can be a good thing. Remember that it is YOUR money and YOUR future in YOUR hands.


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