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Credit
Credit is an important aspect of financial management that can easily
help you achieve your goals in the long-term or create problems
that follow you in more places than you would ever think.
Advantages
Credit cards are a quick source
of money and are just as easy to use as cash these days. With credit
cards, the world seems at your fingertips because you buy things
over the Internet, over the phone or at nearly any store you shop
at. It's quick, simple and easy to present the plastic and make
numerous charges to it.
Disadvantages
The
setbacks of course are you need to pay it off, and as quickly as
possible. Otherwise interest rates will add up and soon you will
have a much larger debt than you could have foreseen when you were
making a whole bunch of small charges to it. Credit card companies
offer different APRs or annual percentage rates, as well as annual
fees. The annual percentage rate determines how much extra money
they can charge you for the amount of money you owe them. For instance,
if you get a credit card with a 15% APR, for every $100 you charge,
the credit card company will collect an additional $15 as a fee
for every month it isn't paid off.
Credit
history
Your credit history will pop up for all kinds of stages in your
life. People check your credit history when you apply for a loan,
a car, an apartment and sometimes even a job. Anyone who pays bills
and borrows money has a credit history somewhere; it proves you
pay your bills on time. There are three main credit bureaus that
have records of loans and the payments toward them, whether they
are car loans or house mortgage payments. If your credit is good,
financial lenders will feel safe giving you more money and approving
you for major purchases. However, if your credit is bad, you could
be denied loans and a future home for years.
Good
credit practices
Try
to have only one or two cards at any time. Shop carefully for them
and check into all aspects of the agreements, including APR, fees
and grace periods. Pay off charges as quickly as you can at the
end of the month or at least pay over the minimum monthly charge.
If you're having trouble making the payments on it, cut up the card
and quit using it.
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