Credit cards are both one of the most ingenious, and at the same time nefarious, inventions of all time. You get these awesome offers in the mail about high credit limits and no interest rates and bonus offers galore ? you can actually buy stuff without paying up front for it! And then you see the fine print ? and realize that yes, it really is too good to be true.
Credit card companies think up great offers to get you to apply for their credit cards, knowing full well that the rules and regulations are so complex that most people will mess up at some point or another. Either they?ll miss a payment, pay late, go over their limit, etc. and BAM! Suddenly your interest rate goes sky high.
Of course, if you?re one of the more responsible credit card users, you?ve never missed a payment, or paid late, you keep a low balance on the credit card and you pay off your purchases each month, then you?re golden! Until you get that notice in the mail saying there?s a change in the APR across the board for all users. And suddenly all of your good behavior through the years still results in an 18.99% interest rate.
No matter how much you love your credit cards, remember, they are very sharp double-edged swords. Credit card companies are in the business of making money ? so anything they offer that sounds too good to be true probably is. Their goal is to maintain a sustainable profit ? and special offers are great for that.
Avoiding credit card issues is a simple matter of avoiding credit cards all together. Of course, that?s not always feasible for people, since credit cards can be a useful tool and help build your credit score. If you absolutely must have a credit card, it?s important to at least go about getting one the right way.
And as with any financial decision, step one is always research. Research your own credit history and score (which can affect the interest rates you?re offered) and sift through all the credit card offers you?ve received. Typically the thing to look for is a low APR, or zero APR to start and then a fair APR after 6-12 months.
One you?ve found an offer you like, contact the company with any questions, especially regarding the fine print. The credit card reps are paid to answer your questions, so take full advantage of that. Be blunt and straight forward, and ask them to be the same with you and lay out the pros and cons of their credit card?s offer for you.
Finally, be careful about the credit limit offered to you. High credit limits present a temptation you?re better off avoiding. If your credit card approval comes through and the limit is higher than necessary, ask the company to lower it to something more manageable. This will help keep you from spending too much money and keep you out of hot water with the credit bureaus.
