Credit Cards: Don't Get Dragged Into Their Claws

According to the government, part of the recent downfall of the economy is due to lack of credit card payments. They have tightened up the credit card laws and made it illegal for credit card companies to raise interest rates without a customer’s knowledge.  As for now, America is trying to get their debt under control. While everyone is doing that, here are a few of the benefits and downsides that have to deal with owning a credit card.

If you ever get stranded on the side of the road, need emergency funds for school, or need emergency money of any kind a credit card can be a blessing. The rates have lowered since 2009. Now you can get credit cards with a rate as low as 0%. It does depend on your credit score, as to what you will receive for an interest rate and credit limit.

Credit cards can be a great way to raise your credit score or gain credit. For people starting out that have no credit, there are credit cards out there that help build credit. These are great if your credit score is a little below average. Visa and American Express offers a prepaid credit card. It acts just like a debit card. You put money on the prepaid card ahead of time and then make purchases. Prepaid cards are for people with bad credit and they wish to raise their credit score.

Just like everything else in life, credit cards do have their own drawbacks. The drawbacks vary in degrees from people to people.

The first drawback is there is a chance of raised interest. When you make a purchase using your credit card you don’t owe anything, until you receive your monthly statement.  If you do not pay the full amount due on the monthly bill, and only pay the minimum payment due, than you can actually higher the amount that is due each month. This is because if the total amount due is not paid in full, then interest accrues on your card every month, raising your amount.

Some credit cards have hidden fees. Always be sure to read the fine print in your agreement. Some credit card companies will charge you fees if you have a daily limit and over spend. The fee could be a hefty one to. You might get charged as much as a $300 dollar fee for going over a limit of $20.

When making a decision to get a credit card it’s best to weigh the pros and cons. Check all available options that are available to you. Don’t settle for the first card you get accepted to.