What’s A Credit Card?

What’s a credit card? A credit card is a financial instrument, which can be used more than once to buy products on credit instead of cash. It’s also called charge card or plastic card.

A plastic card issued by a bank or business authorizing at a specific interest rate. Users are limited in how much they can charge, but they are not required to repay the full amount each month.

That is, a credit card is different from a debit card in that it does not remove money from the user’s account after every transaction.

Are credit cards very useful nowadays? Absolutely right as they can be used ONLY for:

- Emergencies.

- Unexpected incidents.

- Or for purchases when cash is not available.

Can you pay the card down to a zero balance? A credit card makes it possible for consumers to revolve their balance by making minimum payments but with interest charges compounded daily.

The question that most people are asking recently: Are more people in credit card debt nowadays?

Not just more people, but the entire USA government. There is a study showed that over 40% of people owe over $40,000 in credit card debt. The real reason for that is the high interest rate that creates a never ending cycle of debt and bank profit.

What are the common mistakes leading to high credit debt?

- Dealing with bad credits that affect your credit score report.

- Not knowing the interest rate.

- Spend more than you make by buying things that you don’t need.

- Creating new credit cards without managing your finances.

- Choosing the wrong card.

- Paying only the minimum.

- Not reading the fine print.

- Paying late.

- Get credit cards that you can’t afford.

- Depending on credit cards more than cash.

How can we avoid credit card debt?

- Choose the right credit card that meets your needs and your current financial situation.

- Avoid bad credits.

- Know your interest rate.

- Put a limit to your spending habits and avoid extra expenses.

- Determine your monthly income and needed expenses so that you will be able to manage your finances.

- Pay on time.

To help keep you on track, set goals and put motivators in place!

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