The Credit Card Trap

Posted on November 3, 2011 by

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Credit cards can be wonderful and terrible at the same time. If you’re in a pinch, it’s nice to have the card on hand. However, with high interest rates credit cards can be more of a headache than a help. I’m sure a lot of us have fallen into the credit card trap. I know I have. In order to avoid falling victim to the evilness that is credit cards, here are a few help tips:

1. Think twice before you sign. It’s easy to forget about interest but every time you don’t pay off your FULL balance within the allotted time, you’re gaining interest. That interest can pile up over time and make a $10 meal at Chipotle cost hundreds of dollars.

2. Don’t charge tuition. In the long run, you’re paying way more for your tuition than it actually was due to interest.

3. Create a budget. Most credit cards come with a monthly limit. Some are higher than others depending on your credit. Make sure that when you first get a credit card, your monthly limit is something that is financially manageable for you. Next, if you can avoid it, don’t reach that limit every month.

4. Be on guard for identity theft. I’m sure the majority of us know someone who has had an issue with identity theft. For me, it was a friend of mine who owns a local gym. Someone in Florida got ahold of his company credit card and charged $700 on random stuff like tires, clothes, and computer supplies. Don’t let this happen to you. Make sure to keep all personal information (i.e. your Social Security number, drivers license number, address, etc) aren’t left out in the open.

Credit cards can be a big help in times when there’s a pinch for money. However, it’s important to remember that 1. it’s not free money and 2. the interest you can accumulate over time can make something that was relatively inexpensive much more than it actually was. So before you go and sign up for a bunch of different credit cards, make sure you’ve really thought about the decision you’re about to make. Make a list of the pros and cons or talk with a parent or friend about it. Do whatever you need to do to make sure you don’t fall into the credit card trap.

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