Fri 30th Mar, 2007
Using Credit Cards
Your credit card should be considered as a convenient tool that will help you with your cash flow and budgeting your finances. When you use your credit card, you can defer payment on purchases for up to two months without having to pay interest on it, but only if your credit card has an interest-free period. Typically most credit cards have interest-free periods on purchases for up to 56 days from the day of the purchase. If a repayment on the product is not received before the interest-free period, the credit card company will charge you interest and backdate the interest from the date of the original purchase. If you keep track of your purchases and pay off your credit card balance off in full each month, a credit card can be an extremely useful tool.
If you fail to pay off your balance in full by the end of the month you can easily fall into debt fast. If you miss a payment you may discover that your mistake will become extremely expensive. Most credit cards charge interest from the original transaction date until the entire balance has been cleared. Paying just the minimum monthly payment on your card will prolong your debt and only increase the amount owed on your purchases because of the interest that the credit card companies are charging. This in effect makes your outstanding amount an unsecured loan at a very high rate of interest.
If you use your credit card, you must think of it as a useful tool and use it wisely. If you are not careful you can quickly fall into debt with the interest rates charged by your credit card company as well as any late fees or other charges that your credit company may charge.