\Credit cards are quite useful while they know how to manage them properly. Unfortunately, it is too easy to get too deep. Here are some of the dangers of the use of the credit card.
High probability of incurring huge debt
The changes of incurring huge debt increase when you have the habit of passing them to each purchase. The purchase of edible articles for shopping for expensive products online, it is too easy to build the debt on their cards. You no longer have to pay the balances in each month, it may be easy to pay only the minimum and let the debt to grow.
High interest rates
The interest rate on a credit card is usually higher than that of personal loans or guaranteed loans. This means that you pay extra - only to borrow money. Any time that you carry a balance, are paying a considerable fee. It is money that can be spent on the elements which have more use for you, or it could be reversed. A variable rate is even more insidious, since you can upload as a change of interest rate, which means that you pay more. Even low introductory rates expire, leaving him with higher interest rates. However, pay off your balance each month, and interest will not be a problem.
Consequences of making only minimum monthly payments
The minimum monthly payment is the lowest amount that a debtor has to pay towards the outstanding balance each month. It is calculated on the basis of a specific percentage of the outstanding balance as referred to in the terms and conditions of the special credit account. To make only the minimum monthly payment, it takes more time to pay the debt and finally pay more interest. Credit card issuers love this situation, because it makes them more money over time.
Be sure to close your credit card account
When you close your credit card account, must always take account of how will affect your credit rating. In certain circumstances, close your credit card account may result in lowering its rating by several points. This is especially true when closes the account still has balance or who has been using for a long period. To close a credit card with an outstanding balance. If you close a credit card with a long credit history, then also you can impair your credit rating because part of your score depends on the length of your credit history.
Credit cards can be useful financial tools, but only if used with care. Make sure that there is a plan before committing to a credit card.
K.Smith is a contributing writer associated with the debt consolidation care community and has written several articles for various financial websites.
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